Fitch to review France's credit rating in 2013

PARIS Wed Nov 21, 2012 5:41pm IST

Euro banknotes and a calculator are placed on a currency graph and ticker in this picture illustration taken in Zenica October 19, 2011. REUTERS/Dado Ruvic/Files

Euro banknotes and a calculator are placed on a currency graph and ticker in this picture illustration taken in Zenica October 19, 2011.

Credit: Reuters/Dado Ruvic/Files

Related Topics

PARIS (Reuters) - Credit rating agency Fitch said on Wednesday it will review its triple-A rating on France next year, as Paris hailed a muted market reaction to a Moody's downgrade this week as a sign of investor confidence in its policies.

French-owned Fitch is the only agency to retain a triple-A rating on the euro zone's second largest economy, though it has a negative outlook.

Moody's decision to cut France by one notch to Aa1 on Monday followed a similar downgrade by Standard & Poor's in January.

"France will be re-examined, as Fitch has said, in the course of 2013," Fitch Chairman Marc Ladreit de Lacharriere told France Inter radio.

French bonds largely shrugged off the Moody's downgrade, which had been widely expected after the agency put France on a negative outlook in February.

The yield spread of French 10-year bonds to benchmark German Bunds stood around 75 basis points on Wednesday, only slightly changed from 72 before the downgrade.

Finance Minister Pierre Moscovici said the market response to the news was a vote of support for government efforts to trim France's deficit, boost competitiveness and make labour markets more flexible.

"There is confidence in the French economy," Moscovici said. "Our loans are still being served at an extremely low interest rate. France has credibility."

Moody's had cited France's sustained loss of competitiveness and a failure to tackle structural problems amongst the reasons for its decision. It also voiced concerns over France's fiscal situation and the risk of knock-on effects from the euro zone crisis.

French officials have been quick to point out that preliminary third-quarter GDP figures showed France's 2-trillion-euro economy growing 0.2 percent quarter-on-quarter, the same rate as euro zone powerhouse Germany's.

Moscovici said France's Socialist government regarded the downgrade as an encouragement to press ahead with reforms. However, he dismissed Moody's warning that France could miss its budgetary growth targets, jeopardising its plan to cut the public deficit of 3 percent of GDP next year.

"If we are able to provide remedies to the problems of the euro zone ... if we are able to implement our competitiveness policy ... and companies respond to it, then we will have 0.8 percent growth next year and 2 percent in 2014," Moscovici said.

(Reporting By Jean-Baptiste Vey and Daniel Flynn; Editing by Stephen Nisbet)

FILED UNDER:
  • Most Popular
  • Most Shared

DEFENCE

REUTERS SHOWCASE

Power Theft

Power Theft

India to invest $4 billion to tackle power theft  Full Article 

Debt Funds

Debt Funds

India monitors foreign flows into debt funds, may tighten rules  Full Article 

Bulgari Back in India

Bulgari Back in India

CEO: we shouldn’t have left India so we’re back  Full Article 

 Hindu "Modi-fication"

Hindu "Modi-fication"

Fears grow about Hindu "Modi-fication" of education  Full Article 

Weak Credit

Weak Credit

Hard to hit tax revenue target, credit weak - Jaitley  Full Article 

China Rate Cut

China Rate Cut

China surprises with interest rate cut to spur growth  Full Article 

Gold Imports

Gold Imports

RBI cautious on response to gold import surge  Full Article 

Economic Corridor

Economic Corridor

China commits $45.6 billion for economic corridor with Pakistan  Full Article 

Overseas Funds

Overseas Funds

RBI says overseas borrowed funds can be parked with banks in India  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage