Fitch warns France could be downgraded next year

LONDON Wed Nov 28, 2012 9:17pm IST

A flag flies from the roof of France's former Bourse or stock market building Paris August 18, 2010. REUTERS/Charles Platiau/Files

A flag flies from the roof of France's former Bourse or stock market building Paris August 18, 2010.

Credit: Reuters/Charles Platiau/Files

Related Topics

LONDON (Reuters) - Fitch Ratings could strip France of its triple-A credit status next year if the country fails to meet its targets on debt reduction and its economy performs worse than forecast, one of the agency's top sovereign experts warned on Wednesday.

Fitch is the only of the three major rating firms to still rate France triple-A after Moody's cut it one notch earlier this month and Standard & Poor's did so in January.

Worries over the finances of the euro zone's second largest economy have bubbled under the surface through three years of debt crisis, but markets have so far given it the benefit of the doubt, focusing instead on Italy and Spain.

"We think it is challenging for France to hit its 3 percent deficit for 2013 particularly given its anaemic growth prospects," Tony Stringer, managing director of Fitch's sovereign rating group told Reuters in an interview.

"Any underperformance on either fiscal consolidation or on fundamental economic reforms could lead to a downgrade in 2013."

Fitch currently expects France's economy to see 0.3 percent growth next year.

The head of France's debt agency told Reuters earlier on Wednesday he was seeing record buying of the country's bonds by investors in Asia and the Middle East and that a more stable euro zone should support future demand.

The country's borrowing costs are currently near record lows as the euro zone crisis leaves investors with fewer options but Stringer warned that yields could rise again.

"A flurry of bad economic news on the euro zone could reverse the tightening trends we have seen in yields, it could go the other way and we have said we do expect periods of markets volatility," he said.

(Additional reporting by Maryam Behmard; editing by Patrick Graham)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Fuelling Change

REUTERS SHOWCASE

NSEL Fraud

NSEL Fraud

Govt orders Financial Tech to absorb NSEL, liabilities  Full Article 

Quarterly Result

Quarterly Result

HDFC Bank net profit up 20 percent, lags estimates.  Full Article 

JLR China

JLR China

JLR sees 20 percent growth in China sales this year - exec  Full Article 

China Economy

China Economy

China's growth slowest since global crisis, annual target at risk  Full Article 

Coal Reforms

Coal Reforms

Factbox - India pushes ahead with coal reforms  Full Article 

Apple Result

Apple Result

Apple's iPhone sales beat Street but iPad volumes slide  Full Article 

Airport Accident

Airport Accident

Total CEO de Margerie killed in Moscow business jet accident  Full Article 

Nadella's Paycheck

Nadella's Paycheck

New Microsoft CEO Nadella's pay tops $80 mln with big stock awards.  Full Article 

Reuters India Mobile

Reuters India Mobile

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