Tags: S&P | France | Serious | Debt | US

S&P: France Is More Serious About Debt Than US

Wednesday, 10 Aug 2011 03:09 PM

 

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The French government has been more serious than the United States in addressing fiscal issues, therefore France's triple-A sovereign rating is not at risk, a Standard & Poor's analyst said on Wednesday.

Fears that France could be the next triple-A rated country to be downgraded after the United States hurt the euro and stocks of French banks on Wednesday.

But S&P's analyst Nikola Swann downplayed those concerns in a phone conference with clients, saying France has better fiscal flows and lower budget deficits than the United States, although indebtedness ratios are similar in both countries.

S&P also believes France is on track to solve its debt problems, unlike the United States.

"They passed both measures to raise revenues and reduce expenditures and they also pushed through a politically contentious pension system reform which will improve the long-term fiscal sustainability of the French government," said Swann, S&P's top analyst for the United States, in a phone conference with investors.

"So we do see more seriousness in addressing fiscal issues in France than in the U.S.," he added.

S&P on Friday lowered the U.S. credit rating to double-A-plus with a negative outlook, threatening to cut it again in the next two years if Washington fails to fully implement the deficit-reduction measures agreed last week.

Swann said that decision will have no knock-on or ripple effects on other sovereign ratings, however.

Rival agencies Moody's Investors Service and Fitch Ratings, which still give a triple-A rating to the United States, also said they are not contemplating any changes to France's sovereign ratings in the near term.

© 2014 Thomson/Reuters. All rights reserved.

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