Moody’s keeps France’s rating at Aa3 but warns a downgrade remains possible

Moody’s has kept France’s credit rating at Aa3, but maintained a negative outlook, signalling that a downgrade remains possible as the country faces rising borrowing costs, political deadlock and mass protests.

The decision avoids an immediate cut that financial markets had feared. Yet the negative outlook reflects Moody’s concern that France’s debt burden is higher than previously expected and that social protests could obstruct efforts to improve the public finances.

Unrest has pushed up yields on French government bonds, increasing the cost of financing a national debt of about €3.6 trillion, equivalent to 119 per cent of gross domestic product. EU budget rules set reference limits of a deficit of 3 per cent and public debt of 60 per cent of GDP.