French bond investors brace for Moody's rating review
By Stefano Rebaudo
Oct 23 (Reuters) -Rating agency Moody's will review France's sovereign rating on Friday in what could be the next test of sentiment for bond investors.
Moody's rates France at Aa2 and the market has already priced in the risk of a downgrade given concerns about the country's finances.
WHY IT'S IMPORTANT
Rating agency decisions affect how easily countries can raise funds on the bond markets. A downgrade would pile pressure on an already weak French government and might impact demand for French debt among foreigners - the dominant players in the country's bond market.
France is one of Europe's biggest bond markets with outstanding debt of around 2.6 trillion euros ($2.8 trillion).
BY THE NUMBERS
The gap between French and German DE10FR10=RR 10-year yields - the premium investors demand to hold France's bonds - was last at 74 bps. It was around 77 bps before Prime Minister Michel Barnier presented the budget bill for 2025, and hit a multi-year high above 85 bps in the summer.
French credit default swaps are already trading in line with weak single A- or even triple BBB-rated swaps, below France's current AA rating.
S&P Global Markets Intelligence data shows five-year CDS for France at 33 bps, versus 31 bps for Spain, which Moody's rates two rungs lower. French CDS were around 24 bps prior to this summer's election.
KEY QUOTES
"I would expect a significant market reaction to Moody's just if the agency downgraded the French rating, a move which I see as very unlikely," said Massimiliano Maxia, senior fixed income specialist at Allianz Global Investors.
"While an outlook change is possible, I don't expect a downgrade from Moody's, as the rating agency is very focused on debt affordability," said Christoph Rieger, head of rates and credit research at Commerzbank.
CONTEXT
In July, Moody’s warned the outcome of France's election was negative for the country's credit rating. Rival agency Fitch cut France's outlook to "negative" from "stable" in mid-October and kept its rating at AA-.
France was downgraded by rival S&P in May to AA-.
France's 10-year bond yields FR10YT=RR were last at 3.05%, from around 3.2% in early June.
WHAT'S NEXT
Markets are waiting for the National Assembly to pass the 2025 budget, which includes 60 billion euros in spending cuts and tax rises.
Barnier's minority government risks a no-confidence motion in pushing for parliamentary approval of the plan.
GRAPHIC
($1 = 0.9275 euros)
FRrating https://tmsnrt.rs/3A0Jtai
Reporting by Stefano Rebaudo; Editing by Amanda Cooper and Christina Fincher
免责声明: XM Group仅提供在线交易平台的执行服务和访问权限，并允许个人查看和/或使用网站或网站所提供的内容，但无意进行任何更改或扩展，也不会更改或扩展其服务和访问权限。所有访问和使用权限，将受下列条款与条例约束：(i) 条款与条例；(ii) 风险提示；以及(iii) 完整免责声明。请注意，网站所提供的所有讯息，仅限一般资讯用途。此外，XM所有在线交易平台的内容并不构成，也不能被用于任何未经授权的金融市场交易邀约和/或邀请。金融市场交易对于您的投资资本含有重大风险。
所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。
本网站上由XM和第三方供应商所提供的所有内容，包括意见、新闻、研究、分析、价格、其他资讯和第三方网站链接，皆保持不变，并作为一般市场评论所提供，而非投资性建议。所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为适用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。请确保您已阅读并完全理解，XM非独立投资研究提示和风险提示相关资讯，更多详情请点击 这里。
