Moody’s ratings agency warned on Monday that France’s weak growth and rising bond yields has put the country at the lowest ranking against the euro zone’s six AAA-rated countries.
France’s weak economic fundamentals will create challenges amidst a deteriorating market climate. Based on this reasoning, Moody’s warned that the outlook on France’s credit rating is at risk, though not in the immediate future. However, any prospect of France losing its top-notch credit rating was negative to the markets and the euro today, and weighed on European bonds. Yields on Spanish, Italian as well as French bonds rose again today.
“Elevated borrowing costs persisting for an extended period would amplify the fiscal challenges the French government faces amid a deteriorating growth outlook, with negative credit implications,” Senior Credit Officer Alexander Kockerbeck said in Moody’s Weekly Credit Outlook dated Nov. 21.
“As we noted in recent publications, the deterioration in debt metrics and the potential for further liabilities to emerge are exerting pressure on France’s creditworthiness and the stable outlook (though not at this stage the level) of the government’s Aaa debt rating,” the Moody’s note read.