A top official of Standard & Poor's said France will retain its AAA rating, allaying fears of possible downgrade of the country’s rating due to ongoing eurozone debt crisis.
"The rating for France is a stable AAA and that has been the case since 1975. We are confident on that rating,” S&P Europe chief Carole Sirou told RTL radio.
Following a surprise U.S. debt rating downgrade by S&P’s on Aug 5, the markets' attention turned to other AAA-rated countries, which are at risk of a similar downgrade.
S&P's lowered the long-term U.S. credit rating to AA+ from AAA, saying that in its opinion, a recently passed deficit cutting plan by the U.S. government fell short of the goal of stabilizing the government's medium-term debt dynamics. The outlook on the long-term rating was also listed as negative and the rating could fall further.
Besides, the U.S. downgrade intensifying debt crisis in the Euro region raises doubts over further AAA downgrades from the rating agency.
“In the wake of the U.S. downgrade by S&P's, investors are increasingly scrutinizing the rest of the AAA-rated countries, in particular in Europe, to gauge which may follow the U.S. route,” said Standard Chartered in a note.
Among the countries with AAA ratings, the UK and France are in the most delicate situation, with deficit and debt ratios of 10.5 percent and 80 percent, respectively, for the UK and 7 percent and 82 percent for France, said Societe Generale.
“France is the AAA-rated country with the weakest market perception today,” SG said.
Rumors over a possible France downgrade witnessed a plunge in bank shares last week, amid worries of their high exposure to debt-laden Greece.
The other two rating agencies, Moody’s Invertors Service and Fitch Ratings, already stated any such move was not in consideration, in reply to fears over a France downgrade.