WASHINGTON (AFP) ― Credit rater Moody’s assigned the European Stability Mechanism, Europe’s new emergency fund, a “AAA” rating Monday, but labeled it with a negative outlook.

Moody’s cited the ESM’s expected low leverage, the credit-worthiness of the eurozone countries behind the ESM, and the fund’s preferred creditor status in giving it a top “Aaa” grade.

But Moody’s assigned its negative outlook to the 500 billion euro ($650 billion) permanent bailout fund, putting it on an equal level with the ratings of all but one of the “Aaa”-rated eurozone countries, also listed with negative outlooks.

Moody’s warned that the deterioration of the credit-worthiness of euro member states could pull down the ESM’s rating.

“A weakening in the political commitment among euro area member states to the ESM could have negative rating implications,” Moody’s added.

The ESM was launched officially on Monday, Luxembourg Prime Minister and fund chairman Jean-Claude Juncker saying it “marks an historic milestone in shaping the future of monetary union.”

The fund was initially due to enter service on July 1 but, was delayed by a challenge at the German Constitutional Court.

It will initially hold 200 billion euros ($260 billion) when the first installments of government capital are paid by the end of the month.

Juncker said the currency union, troubled for the last three years by massive sovereign and banking debts, had now “closed the gap in euro area institutions” with another element in “a comprehensive plan to reshape economic governance in the euro area.”

Credit rater Moody’s assigned the European Stability Mechanism, Europe’s new emergency fund, a “AAA” rating Monday, but labeled it with a negative outlook.