We imagine it is a relief for the French CEO that ratings agency S&P has maintained its rating at AA in contrast to sister Fitch Ratings which downgraded it to Aa-.
Note that this deterioration had little impact on interest rates during recent auctions, averaging 2.83%.
Nevertheless she has She kept her “negative” expectations.Which means that the country is not immune to decline.
This maintenance is “mainly due to a review of the government’s budget consolidation strategy,” the ratings agency wrote, citing positive facts that, in addition to the pension reform, the end of the planned purchasing power aid to a serious drop in prices. of raw materials and energy.
Standard & Poor’s expects the French budget deficit to narrow to 3.8% in 2026.
In its assessment, Standard & Poor’s estimates that more restrictive access to credit conditions, persistent inflation and higher wages (labor shortage) will affect economic activity in France in 2023 and 2024 and above all effective debt interest.
In addition, S&P expects France’s budget deficit to fall to 3.8% in 2026, from about 5% in 2023, and the debt to remain above 110% of GDP.
It remains to be seen how investors will react during the upcoming Treasury auctions.
It is possible that the investment decisions of some world heavyweights in France and various meetings between Bercy experts and S&P experts made it possible to maintain this rating, but for how long? …
French debt is close to 3,000 billion and more than 111% of GDP.
