LONDON: German Bunds futures rose on Wednesday after Standard & Poor's reduced its credit ratings on 15 banking companies, mostly in Europe and the United States, offsetting an agreement on ramping up the firepower of the euro zone rescue fund.
JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, Goldman Sachs Group Inc, Morgan Stanley, Barclays Plc, HSBC Holdings Plc, Royal Bank of Scotland Group Plc and UBS AG , were among the banks that had their ratings reduced by one notch each.
The move is likely to add to concerns over the health of the financial sector, which have in recent weeks made European banks reluctant to lend to each other in the inter-bank market.
German Bund futures were 59 ticks higher at 133.98, with European stock futures pointing to a lower start for equity markets.
"For me there are two factors, the S&P downgrades for banks and we see the equity market opening weak today", Alessandro Giansanti, strategist at ING said, adding that the recent sell-off in Bunds had gone too far.
Euro zone ministers agreed to increase the capacity of their rescue fund, but couldn't say by how much, and may turn to the IMF for more help.
The aim was for the IMF to match and support the new firepower of the European Financial Stability Facility, Eurogroup chairman Jean-Claude Juncker told a news conference.
"I think that's the only way that the EFSF has to increase its capacity, to ask for money from other investors outside the euro," Giansanti added.
Italy has had preliminary discussions with the IMF about financial support to cope with the euro zone's debt crisis, possibly co-funded by national European central banks, but no decision has been taken, several sources close to the situation said.