Investors have found themselves compelled once more to rethink the concept of safe-haven assets, following the decision by one of the world’s leading debt rating agencies to knock France off its triple-A pedestal.

Standard & Poor’s declared on Friday that the Fifth Republic no longer commanded the agency’s highest possible rating — cutting it by one notch to AA+. France’s fall came as S&P took an ax to ratings across the euro zone. It downgraded eight other countries, ranging from triple-A Austria to weaker regimes including Italy, Spain and Portugal, the latter falling two levels to junk bond status.

S&P justified the moves by warning 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 euro zone.”

News of the rate slashes — which leaked out drip-by-drip hours before S&P’s formal announcement following the closure of U.S. markets — sent the euro more than 1 percent lower to a 17-month trough against the dollar. Yields on Italian bonds — which have been flighty over the past few months, even during periods of relative market bonhomie — rose 12 basis points (bps) to 6.82 percent, before emergency buying by the European Central Bank pushed them back down. But yields on German Bunds — which retained their triple-A rating on Friday, along with the sovereign debt of Finland, the Netherlands and Luxembourg — were 6 bps down on the day at 1.78 percent, diving deeper into negative real-term territory after allowing for inflation. ....

Read More: Bonds · euro zone · Standard & Poor's · France