Tags: France’s AAA Grade Affirmed by S&P on Bet Budget Gap Will Fall

France’s AAA Grade Affirmed by S&P on Bet Budget Gap Will Fall

Thursday, 23 Dec 2010 02:35 PM

France’s status as one of the world’s safest borrowers was affirmed by Standard & Poor’s in a bet the euro-area’s second largest economy will get to grips with its budget deficit.

At the end of a year in which rating companies downgraded the debt of European nations from Spain to Ireland, New York-based S&P said today that France deserves a AAA sovereign credit rating because of the “wealth and depth” of its economy and the view that President Nicolas Sarkozy’s government will consolidate its budget gap.

The announcement may encourage investors to buy French debt after the yield on the country’s 10-year bond rose this week as analysts speculated the euro-area’s sovereign debt crisis may cost the nation its top grade. Fitch Ratings today downgraded Portugal’s debt by one level and separately said the turmoil in Europe reflects investor concern about the euro’s “viability.”

“The stable outlook is based on our view of the French government’s substantial achievements with its budgetary consolidation strategy, enabling it to meet its fiscal targets through 2013,” S&P analysts including Madrid-based Marko Mrsnik said in a report today.

The cost of insuring French government debt rose to a record this week, having trebled this year. The country’s credit default swaps are now more expensive than those of lower-rated securities from the Czech Republic and Chile, according to data provider CMA.

France’s top credit rating was vulnerable to a rethink by the credit rating companies because of its budget deficit and because its banks are the biggest holders of debt issued by so-called peripheral countries, analysts said before today’s announcement.

© Copyright 2017 Bloomberg News. All rights reserved.

   
1Like our page
2Share
StreetTalk
France s status as one of the world s safest borrowers was affirmed by Standard Poor s in a bet the euro-area s second largest economy will get to grips with its budget deficit.At the end of a year in which rating companies downgraded the debt of European nations from...
France’s AAA Grade Affirmed by S&P on Bet Budget Gap Will Fall
264
2010-35-23
Thursday, 23 Dec 2010 02:35 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved