Standard & Poor’s officially cut the long-term credit rating of France and eight other Eurozone nations, stripping the Parisian country of its coveted AAA status.

Europe’s debt crisis continued to claim victims, as S&P lowered Italy, Portugal, Cyprus, and Spain by two-notches. Smaller one-level downgrades hit Austria, France, Malta, Slovakia, and Slovenia.

“Today’s rating actions are primarily driven by our assessment that the policy initiatives that have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone,” Primary Credit Analyst Moritz Kraeme said.

The ratings agency reiterated its ratings on Belgium, Estonia, Finland, Germany, Ireland, Luxembourg, and the Netherlands.

Standard & Poor’s has taken all 16 nations off of CreditWatch, indicating they are safe from downgrade in the near term. However, the company has left 14 of the countries, including Italy and France, on negative outlook. Slovakia and Germany were the only two to regain stable outlooks.

The move by S&P ultimately removed AAA ratings from France and Austria, leaving only four nations in the region with the highest possible rating.

“We affirmed the ratings of sovereigns which we believe are likely to be more resilient at their current rating level in light of their relatively strong external positions and less leveraged public and private sectors,” Kraeme said.

France’s decline, from AAA to AA+ also substantially endangers the credit rating of the European Financial Stability Facility.

In an interview before the announcement today, Nomura International Economist and FX Strategist, Charles St.-Arnaud, said European investors had largely priced in the downgrade.

“A lot of it was anticipated, most of the time the ratings are lagging the data,” Mr. St.-Arnaud says. “The only thing is how much has it changed the rating of the EFSF. They did everything they could to ensure it would be AAA, but now that France is downgraded, and it was one of the largest contributors, that’s in question.”

Portugal and Cyprus saw further downgrades today, pushing their debt to junk-territory. S&P now rates the pair as BB and BB+, respectively.

Kraeme noted in the event of default in either country, investors could expect to recover at most 50% of assets.

Greece’s credit rating was not adjusted by S&P today, remaining below investment grade at CC.

Before markets opened in the U.S., Dow Jones reported that Standard & Poor’s was likely to take ratings action in Europe after weeks of speculation. The ratings firm had placed the debts of 15 nations on CreditWatch in early December, adding them to a list that already included Cyprus.

Slowly over the course of the day, top leaders in the French, Italian and Austrian governments, announced that they had received notification from Standard & Poor’s that they would see a downgrade after markets closed the week.

The ratings agency formally announced its decision at 4:36 p.m. EST. Prior to that time, S&P declined comment, even as leaders of impacted countries announced the pending news.

Whispers of the downgrades today sent the euro on a race lower, where it touched a 16-month low against the dollar. The currency is currently down more than 1.1% to $1.2675.

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