Moody’s lowers France’s credit rating by one notch to “AA3”

On Friday night, Moody’s credit rating agency lowered the sovereign debt rating by one notch to “AA3” with a stable outlook, in a move that followed the appointment of new Prime Minister François Bayrou.
Following the vote of no confidence in the previous government of Michel Barnier on December 4, Moody’s warned of the “negative” consequences of this step on France’s sovereign rating.

Financial conditions

The agency said the decision “reflects our view that the country’s public finances will be significantly weakened over the next few years” due to “political fragmentation that is likely to prevent meaningful fiscal consolidation.”

For his part, Minister of Economy and Finance, Antoine Arman, said that he took “note” of the decision. He wrote in a statement: “I announced the change in France’s classification (…) speaking about the recent parliamentary developments and the resulting ambiguity.”

He added: “I have taken note of this,” noting that “the appointment of François Bayrou and the reaffirmation of the determination to reduce the deficit are the clear response” to the agency’s concerns.

In October, the global agency lowered France’s rating to “AA2” with a negative outlook.