Live news , top stories, corporate news, company news, sector news, economy news, results analysis news, ceo interviews, fund manager interview, advisor interview, market news, bazaar talk, hot stocks news, ipo news, commodities news, mutual fund news, insurance news, news wire
18 April, 2015 18:41 IST
Moody`s downgrades France by one notch to AA1
Source: IRIS International | 20 Nov, 2012, 09.47AM
Comments  |  Post Comment

Moody's Investors Service downgraded France's government bond rating by one notch to AA1 from from AAA. The outlook remains negative. 

This rating action follows Moody's decision to change to negative the outlooks on the Aaa ratings of Germany, Luxembourg and the Netherlands. At the time, Moody's also announced that it would assess France's Aaa sovereign rating and its outlook, which had been changed to negative on Feb. 13, 2012, to determine the impact of the elevated risk of a Greek exit from the euro area, the growing likelihood of collective support for other euro area sovereigns and stalled economic growth. Today's rating action concludes this assessment.

Moody's decision to downgrade France's rating and maintain the negative outlook reflects the following key interrelated factors: 

France's long-term economic growth outlook is negatively affected by multiple structural challenges, including its gradual, sustained loss of competitiveness and the long-standing rigidities of its labour, goods and service markets.

France's fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand, and in the longer term due to the structural rigidities noted above.

The predictability of France's resilience to future euro area shocks is diminishing in view of the rising risks to economic growth, fiscal performance and cost of funding. France's exposure to peripheral Europe through its trade linkages and its banking system is disproportionately large, and its contingent obligations to support other euro area members have been increasing. Moreover, unlike other non-euro area sovereigns that carry similarly high ratings, France does not have access to a national central bank for the financing of its debt in the event of a market disruption. 

At the same time, Moody's explains that France remains extremely highly rated, at Aa1, because of the country's significant credit strengths, which include - a large and diversified economy which underpins France's economic resiliency, and a strong commitment to structural reforms and fiscal consolidation, as reflected in recent governmental announcements, which may, over the medium term, mitigate some of the structural rigidities and improve France's debt dynamics.

Comments Post comment 
 Post Comment
Name Email
Comment
Security Code type    into this box
Related Articles
KNR Constructions bag orders worth Rs 9.37 bn - 17-Apr-2015 18:16
Piramal Enterprises to acquire majority stake in Health SuperHiway - 17-Apr-2015 16:35
Reliance Q4 earnings beat estimates; revenue slumps on weak oil price - 17-Apr-2015 16:26
PNB slashes fixed deposit rates by 0.25% - 17-Apr-2015 13:09
TCS: How analysts read Q4 numbers - 17-Apr-2015 11:50
CRISIL assigns fundamental grade 3/5 to Ram Ratna Wires - 17-Apr-2015 11:30
IPCA Lab sells 0.8% stake in Mangalam Drugs - 16-Apr-2015 19:20
Franklin Mutual Series Funds sells 0.55 mn shares in Polaris - 16-Apr-2015 19:11
TCS Q4 adjusted profit climbs 8.4% sequentially - 16-Apr-2015 17:56
TCS announces Rs 26.28 bn special bonus for employees - 16-Apr-2015 16:43
MindTree Q4 profit rises 31%, but falls 8.6% sequentially - 16-Apr-2015 16:30
more...
Home  |   Shares  |   F&O  |   Mutual Funds  |   Loans  |   Insurance  |   News Centre
Wealth Tracker  |   Newsletters  |   Tax Corner  |   NRI Centre  |   Advertise
© All rights reserved. IRIS Business Services Limited
A Disclaimer