Moody’s issued a note today warning that the increased cost for France to borrow money, together with weaker outlook for growth in the new year, could jeopardize the country’s triple A credit rating. Last week, the yield spread between French and German 10-year bonds rose to more than 200 basis points shattering all existing euro-era records.
“Elevated borrowing costs persisting for an extended period would amplify the fiscal challenges the French government faces amid a deteriorating growth outlook, with negative credit implications,” Senior Credit Officer Alexander Kockerbeck said in Moody’s Weekly Credit Outlook dated November 21.
“As we noted in recent publications, the deterioration in debt metrics and the potential for further liabilities to emerge are exerting pressure on France’s creditworthiness and the stable outlook (though not at this stage the level) of the government’s Aaa debt rating,” the Moody’s note read.
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