Standard & Poor’s said a “technical error” unrelated to France’s credit rating was the cause of the message issued yesterday that roiled markets when the company mistakenly suggested the country had been downgraded.
The erroneous e-mail stemmed from S&P’s computer systems incorrectly interpreting the company’s Banking Industry Country Risk Assessment ranking for France, which isn’t a credit grade, S&P said today in a statement. The New York-based firm said it’s “cooperating with all the relevant authorities to provide full background on the matter.”
A downgrade of France’s AAA credit rating would affect the rating of the European Financial Stability Facility, the bailout fund for struggling euro member countries that has funded rescue packages for Greece, Ireland and Portugal partially through bond sales. If the EFSF has to pay higher interest on its bonds, it may not be able to provide as much funding for indebted nations.
French Finance Minister Francois Baroin asked market regulators in France and Europe yesterday to investigate the “causes and potential consequences” of S&P’s erroneous message.
The benchmark Stoxx Europe 600 Index extended its decline to 1.5 percent and French 10-year bond yields surged as much as 28 basis points to 3.48 percent, the highest level since July, after the mistaken announcement yesterday. The euro pared gains and U.S. equities briefly dropped before the message was corrected yesterday.