The Financial Times is reporting that Standard & Poor's ratings service will put 6 euro area sovereigns on creditwatch negative later today.
The countries at risk are Germany, France, the Netherlands, Austria, Finland, and Luxembourg.
That means there's a 50% chance that each country could be downgraded by the agency from AAA to AA+ in the next 90 days.
Markets have moved sharply downward after this report started circulating. The Dow is already off over 50 points, to 12,107.
This spells trouble for the success of plans to bail out struggling eurozone sovereigns, in particular the success of the European Financial Stability Facility.
Even a French downgrade which investors have been worrying about all fall would compromise the lending capabilities of the Facility. A German downgrade would be disastrous.
The move comes ahead of a crucial summit of EU leaders this Friday, in which investors hope they will outline a plan to bring the euro area back to stability.
This could be the straw that breaks the back of Germany, the Netherlands, and Finland, which have been strongly resistant to radical intervention—like greater involvement of the European Central Bank or the issuance of eurobonds. It could also elicit action from the ECB.
Read more at Business Insider.