Egan-Jones Downgrades France's Credit Rating

Thursday, 14 Jun 2012 04:59 PM

 

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Ratings agency Egan-Jones cut France's sovereign credit rating to BBB-plus with a negative outlook on Thursday, citing expectations that the country's funding costs will see more pressure as the eurozone sovereign debt crisis continues to roil markets.

"For the most part, over the past 18 months France has been exempted from the rise in funding costs," Egan-Jones said in a statement.

"However, as the crisis evolves, we expect that France will be pressured. The deterioration in France's credit metrics combined with the needed (support) for France's banks are likely to pressure the country," the statement read.

French President Francois Hollande called on Thursday for the euro zone to adopt bold new mechanisms to insulate member states and their banks from market turmoil, such as a joint fund to pay down debt.

Hollande's urging came just days before Greeks vote on Sunday in an election that could see anti-austerity politicians take the country's reins - which some analysts say could ultimately mean an exit for Greece from the euro zone.

The worries over the fate of the 17-nation monetary union have rattled global investors for more than two years now, with fears spiking as borrowing costs for Spain and Italy hover around unsustainable levels.

Moody's Investors Service currently rates France Aaa, Standard & Poor's rates France AA-plus and Fitch Ratings rates the country AAA. All three of those ratings have a negative outlook.

© 2014 Thomson/Reuters. All rights reserved.

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