France spared Moody's ratings downgrade as it struggles with unrest
The agency said a deficit-reducing 2027 budget could help ease financing costs and social tensions as protests and parliamentary resistance mount.
- On Friday, Moody maintained France's Aa3 credit rating, easing pressure on a government struggling with social unrest and strained finances.
- The agency's decision follows concerns over "fragmentation in parliament" and budget deficits, as The French government navigates political paralysis after a 2024 snap election.
- France's 10-year Bond yield hit 5.14%—the highest in 15 years on Thursday—while the 2027 budget targets a deficit of 5% versus 5.4% this year.
- Violent protests by student collectives and French CRS Officers escalated into riots last weekend, complicating the government's ability to pass the 2027 budget.
- With the presidential election approaching next year, Mike Bell, head of market strategy at RBC BlueBay Asset Management, warned further downgrades could "get more ugly.
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The international rating agency Moody's decided not to change France's long-term credit rating by keeping it at the Aa3 level with negative projections. Refraining to change the valuation is justified by the assumption that France will adopt a budget with a reduced deficit in 2027, transfers TASS with reference to AFP. The agency did not specify whether protests in the country were taken into account in formulating the forecast, but analysts are…
Moody's abstained on Friday, contrary to general expectations, from any action on the French debt rating, de facto maintaining his Aa3 rating with a negative outlook, reports AFP.
While a deterioration was expected, Moody的s maintained the French note on Friday at Aa3, with a negative perspective. Sébastien Lecornu sees it as a signal in favour of his draft budget for 2027.
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