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German gov't denies 'Elite Bonds' plan
German Finance Ministry denies report of plan for 'Elite Bonds' of top eurozone nations
By The Associated Press

BERLIN (AP) ' Germany insisted Monday that it has no plans to float bonds together with the eurozone's five other triple A rated nations and use the proceeds to provide assistance to some of the single currency bloc's indebted members, such as Italy and Spain.

The denial from the Finance Ministry came as credit rating agency Moody's warned that the "rapid escalation" of Europe's financial crisis is threatening the credit worthiness of all eurozone governments, even the most highly rated. Only six of the eurozone's 17 countries have the top rating ' Germany, France, Austria, the Netherlands, Luxembourg and Finland.

Germany's Finance Ministry spokesman Johannes Blankenheim denied a report Monday in Die Welt daily that said proposals for so-called 'elite bonds' were already in the works.

Blankenheim said Germany is "working intensively on a stability union," but that is based on changes to EU agreements.

Chancellor Angela Merkel has staunchly rejected plans for a joint bond floated by all 17 eurozone nations.

The report said the 'elite bonds' are part of a plan Merkel and French President Nicolas Sarkozy are to present at the Dec. 9 EU summit.

Moody's warned in its report that the eurozone "is approaching a junction, leading either to closer integration or greater fragmentation."

After last week cutting its rating on Hungary to junk status, Moody's says more European sovereign borrowers risk falling to that level even in a positive scenario in which the eurozone doesn't split apart.

That's because Moody's considers that Europe's leaders may not agree on a comprehensive resolution to the crisis until "after a series of shocks" that block ever more EU members from access to financial markets.

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