French AAA Rating Affirmed by Standard & Poor’s, Moody’s Amid Market Rout
France’s top credit grade was affirmed by Standard & Poor’s, Moody’s Investors Service and Fitch Ratings as relative yields on the nation’s debt climb on concern that Europe’s sovereign debt crisis is intensifying.
The outlook on France is stable and its AAA ranking is “warranted,” Moritz Kraemer, S&P’s managing director of European sovereign ratings, said today in a Bloomberg television interview. Francesco Meucci, a spokesman for Moody’s, said in a telephone interview the country’s Aaa grade is “stable.” Fitch spokesman Brian Bertsch said France is rated AAA with a stable outlook as per its May 31 statement.
The extra yield investors demand to buy 10-year French debt rather than German bunds, has jumped to 87 basis points, even though both carry AAA grades from the major rating companies. That spread is almost triple the 2010 average of 33, and compares with 17 in the second half of the previous decade. The cost of insuring French debt rose to a record today.
French bonds are the most costly AAA government securities to insure as investors raise bets that top-rated euro-region nations may be next in the firing line after the U.S. was downgraded by one notch to AA+ by S&P on Aug. 5. Credit-default swaps on France trade at 175 basis points, more than double the rate to protect German securities at 86 basis points, CMA data show.
Credit swaps pay the buyer face value if a borrower fails to meets its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
To contact the reporters on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net; Anchalee Worrachate in London at aworrachate@bloomberg.net;
To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net
France’s Top Rating Affirmed by Standard & Poor’s, Moody’s
Fabrice Dimier/Bloomberg
The outlook on France is stable and its AAA ranking is “warranted,” Moritz Kraemer, S&P’s managing director of European sovereign ratings, said today in a Bloomberg television interview.
The outlook on France is stable and its AAA ranking is “warranted,” Moritz Kraemer, S&P’s managing director of European sovereign ratings, said today in a Bloomberg television interview. Photographer: Fabrice Dimier/Bloomberg
Aug. 10 (Bloomberg) -- Moritz Kraemer, head of European sovereign ratings at Standard & Poor's, talks about the outlook for France's AAA credit rating. He speaks from Frankfurt with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Aug. 10 (Bloomberg) -- Steven Englander, head of Group of 10 currency strategy at Citigroup Inc., talks about the performance of European banks and the currency market's reaction to Standard & Poor's stable outlook for France's sovereign debt. Englander speaks with Adam Johnson and Lisa Murphy on Bloomberg Television's "Fast Forward." (Source: Bloomberg)
France’s Top Credit Grade Affirmed by Standard & Poor’s
Scott Eells/Bloomberg
A pedestrian passes in front of the Moody's Investors Service Inc. headquarters in New York on July 28, 2011.
A pedestrian passes in front of the Moody's Investors Service Inc. headquarters in New York on July 28, 2011. Photographer: Scott Eells/Bloomberg
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