Moody's Set to Cut France's Aa3 Rating as 10-Year Yield Hits 5.14%
Updated
Updated · Reuters · Oct 23
Moody's Set to Cut France's Aa3 Rating as 10-Year Yield Hits 5.14%
3 articles · Updated · Reuters · Oct 23
Summary
Moody's is due to rule on France after 2000 GMT, with most analysts expecting a one-notch cut from Aa3 after keeping a negative outlook since last year.
France's strained finances and political paralysis have deepened as riots followed cost-of-living protests, complicating budget cuts and efforts to narrow the deficit to 5% of output in 2027 from 5.4% this year.
Markets have already reacted: France's 10-year bond yield hit 5.14% and its spread over German debt reached a 15-year high, with borrowing costs now above lower-rated Italy's.
A downgrade is largely priced in, but investors are focused on Moody's outlook because further cuts by all three major agencies could push France to BBB, just above junk, after next year's presidential election.