Reuters calms fears over Austria exposure to bank debt

Austrian bond spreads retreated from record highs hit earlier in the week after Moodys lead Austria analyst told Reuters on Friday, Feb. 20, that the countrys Aaa sovereign debt rating was not under pressure from Austrian bank lending to emerging Europe. A Moody`s report on the region’s banking sector earlier that week had stoked fears among investors that Austria may have to nationalise its banks, which had lent 85 pct of GDP to emerging Europe — a scale that could overstretch Austria’s budget. The Reuters interview sparked a series of calls to the bureau from clients including the Austrian debt agency and U.S. hedge funds. It was immediately picked up by other media. Austrian central bank Governor Ewald Nowotny read excerpts from the interview Sunday evening in an Austrian TV talkshow on the financial crisis.