France’s AAA credit status is under threat, after Moody’s warned it may hit the country with a negative outlook if the money spent on bailing out eurozone members and its domestic banks impact too much on its budget.
If the ratings agency did deliver a negative outlook for France, it could lead to a downgrade in two years.
“The deterioration in debt metrics and potential for further contingent liabilities to emerge are exerting pressure on the stable outlook for the government’s AAA debt rating,” said Moody’s in a report.
Moody’s knocked Credit Agricole to Aa2 from Aa1 and cited its high level of Greek debt holdings as a factor. However, Moody’s says it will review the rating again at a later date. Meanwhile, Société Générale had its rating reduced from Aa2 to Aa3, with a negative outlook on account of the level of state support it receives.
Despite the double downgrades in France, Moody’s left BNP Paribas’ long-term credit rating untouched at Aa2, although it did indicate that the Paris-based bank would be kept on review for a possible cut.