THE judgment of the big credit rating agencies may not carry quite the thunderous resonance it used to, but the steady drumbeat of rich sovereign downgrades nonetheless provides an unpleasant crisis rhythm. On Tuesday, Moody's became the latest agency to revise downward its view of the solidity of European sovereigns. The ratings firm passed out a handful of downgrades—to Italy, Malta, Portugal, Slovakia, Slovenia, and Spain—which, while unfortunate, left those countries still hanging on to "investment grade" ratings (all but Portugal) out of "speculative" territory. Moody's left the outlook on those sovereigns negative, suggesting a 30% chance of another downgrade in the next 18 months. Three other sovereigns—Austria, France, and Britain—were spared a downgrade but had their outlooks moved to negative.

One theme featured again and again in Moody's discussion of the changes, which it blamed on:

The uncertainty over the prospects for institutional reform in the euro area and the weak macroeconomic outlook across the region, which will continue to weigh on already fragile market confidence.

Moody's stated repeatedly that the prospects for real institutional reform within the euro zone are dubious, and it isn't clear that euro-zone sovereigns will pony up sufficient funds to deal with the ongoing crisis. In addition, there is concern about the deteriorating euro-zone economy, which is likely in recession. Shaky market confidence and poor growth prospects will make difficult fiscal consolidation plans around the euro-zone periphery hard to implement. That, in turn, will further reduce confidence, calling into question the ability of many different sovereigns to pay their bills.

The details vary somewhat around the continent. Austria's outlook change is influenced by its exposure to central and eastern Europe, where deteriorating economies and volatile political conditions threaten to hit the region's creditors. Moody's questions the ability of the Italian and Spanish governments to enact and stick to the necessary fiscal and economic reforms amid worsening economic conditions, even while acknowledging that austerity will increase the macroeconomic pressure on government budgets. In Moody's analysis, anyway, it's difficult to see a route out of trouble (absent a change in the euro situation such that it is "resolved conclusively").

France is subject to the same pressures as its partners in the euro zone, but changes in its ratings are watched closely given its tenuous hold on AAA status—the weakest among those still grasping such a claim. Standard and Poor's dropped France to AA+ back in January. Should Moody's and Fitch follow suit, markets might react by pushing up both sovereign and bank funding costs. Markets are swallowing the ratings news without much action today, but France is the exception; its long-term yields are up over 1.4% today.

The change in Britain's outlook may come as a surprise given the government's early and aggressive move toward fiscal consolidation, but it is subject to much the same pressure as economies across the Channel. A weakening British economy is threatening the government's ability to meet its fiscal goals. Chancellor George Osborne is spinning the news by arguing that it demonstrates the need for immediate fiscal discipline. His critics, however, are sure to argue that excessive cuts have contributed directly to the weakness responsible for the change. For its part, Moody's suggests that Britain's rating may be at higher risk in the event of a worsening economic outlook and/or a reduced political commitment to austerity, "including...a failure to respond to a deteriorating fiscal outlook". Britain has no option but to pursue procyclical fiscal policy, even if it seems likely to prove futile. The euro zone also features prominently in the discussion of the British move. A deteriorating euro-zone economy poses direct costs on British firms, and the increased odds of bank-funding trouble in Britain raise the possibility that the government might eventually be faced with new bail-out costs.

The news is a reminder that however better the euro-zone outlook seems now, relative to the mood which prevailed last fall, Europe is anything but out of the woods. These ratings moves will not be the last.