Following on October 24's "France's Socialists threaten to oust government amid fraught budget talks" ("if there iis no change by Monday it's all over").
France has its issues, and credit-rating firm Moody’s is finally acknowledging them.
Moody’s changed its outlook on French government bonds to Negative from Stable. The firm rates France’s bonds Aa3, the equivalent of AA-, and a downgrade would bring them to A1. The action follows S&P’s decision to downgrade French bonds to A+ from AA- on Oct. 17. The highest rating that S&P gives is AAA, while Moody’s highest rating is Aaa.
Moody’s was the last ratings agency to make a move in response to France’s challenges. Fitch Ratings in September downgraded France to A+ from AA-, with a stable outlook, in part citing the fragmentation in control of France’s government and political deadlock.
Similarly, in putting France on watch for a credit downgrade, Moody’s cited the nation’s political instability, which “risks hampering the government’s ability to address key policy challenges such as an elevated fiscal deficit, rising debt burden, and durable increase in borrowing costs,” according to the release.
France had been trying to reform its pension system, while also getting its deficit under 5% of gross domestic product, but has failed to agree on a budget. Prime Minister Sébastien Lecornu resigned his position earlier this month after just one month on the job. He had followed François Bayrou, who resigned after nine months over anger at his plan to cut the budget by $44 billion euros. “To call France a ‘hot mess’ would be an understatement extraordinaire,” Yardeni Research founder Ed Yardeni wrote in a note on Oct. 22....
....MUCH MORE
