France Risks AAA on Expanded EFSF Bailout Fund: Euro Credit
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Proposals to beef up Europe’s bailout fund by offering to guarantee portions of the debt owed by the region’s weaker governments threaten to trash France’s top credit rating.
The nation’s 10-year notes are the fourth-worst performers this quarter -- behind Greece, Belgium and Ireland -- as traders speculate the European Financial Stability Facility will be used to insure the first portion of losses in the event of a sovereign default. France’s rating is under pressure, Moody’s Investors Service said yesterday, and investors now demand a record 112 basis points more to hold its bonds rather than German notes, up from 29 basis points in April.