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Egan-Jones Downgrades Germany to A+ from AA-

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06/26/2012 | 03:45pm EST

Egan-Jones Ratings Co. downgraded Germany's rating one notch Tuesday to single-A-plus.

Regardless of whether Greece or other members of the 17-nation common currency bloc leave the euro zone, Germany will be left with "massive, additional, uncollectible receivables," Egan-Jones said in downgrading the country.

The ratings company estimates that Germany is owed EUR700 billion, of which only about 50% is collectable. That figure doesn't include the exposure of Germany's banks to troubled countries in the euro zone.

Reflecting the EUR700 billion in exposure to the troubled euro-zone countries pushes Germany's debt-to-gross domestic product level up to 114%. Its debt-to-GDP level without that additional exposure is projected at 89% for 2012, the ratings company noted.

The euro slid against the dollar immediately following the downgrade, but has since recovered those losses to trade at $1.2500, according to EBS via CQG.

Egan-Jones's rating of Germany is four notches lower than the big three ratings firms', Standard & Poor's, Moody's Investors Service and Fitch Ratings, view on the country. All three of the bigger ratings firms rate Germany as triple-A, the highest credit rating possible.

Egan-Jones has been aggressive in cutting its ratings on euro-zone members as the region's debt and economic crisis continues in recent months. The ratings company slashed its rating on Spain four times in the past two months and now views Spanish debt as junk.

Germany's chances of default over the next year are 1.7%, according to Egan-Jones. Its projected rating, which can be considered an outlook on where the rating might be headed, is single-A-minus.

Write to Stephen L. Bernard at stephen.bernard@dowjones.com

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