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S&P may cut France outlook within 10 days: report

By Reuters
Tuesday, November 29, 2011 6:54 EDT
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PARIS (Reuters) – Credit rating agency Standard & Poor’s could change its outlook on France’s triple-A credit rating to negative within the next 10 days, a French newspaper reported on Monday, citing sources, the latest signal that France’s top-tier status is at risk.

An S&P spokesperson in Paris said the agency did not comment on rumors. A spokesman in Melbourne earlier also declined to comment on the report, which if true would signal a heightened risk of a downgrade in the weeks ahead.

“It could happen within a week, perhaps 10 days,” La Tribune quoted a diplomatic source as saying of a change to the outlook.

The economic and financial daily said S&P — which cut Belgium’s credit rating to double-A from double-A-plus on Friday — had planned to make its announcement on France the same day but postponed it for unknown reasons.

The euro briefly dipped on the report, which coincided with news that credit rating agency Moody’s could downgrade the subordinated debt of a swathe of euro zone banks.

French Finance Minister Francois Baroin said the focus should not be solely on France and that while the euro zone debt crisis was serious, France was “clear-sighted” on it.

“Everyone is concerned, not just France. It’s all the euro zone countries,” he told France Info radio, asked about the La Tribune report.

“France is not an island or economically cut off from the world. It depends on different parts of the euro zone for a large part of its economic activity and that’s why we are, to a large extent, clear-sighted on the crisis.”

On Tuesday morning before the opening bell, futures for French blue-chip index CAC 40 were down 0.2 percent, underperforming futures for Euro STOXX 50 and for Germany’s DAX, up 0.1 percent.

France’s ratings outlook is stable with S&P, but months of talk that a downgrade by one or more of the rating agencies could be on the cards is rattling the French government, which would face a surge in borrowing costs under a downgrade.

President Nicolas Sarkozy, who faces a tough re-election battle in April, has said he will do everything in his power to defend France’s cherished triple-A badge.

On November 10, Standard & Poor’s mistakenly announced it had cut the nation’s rating, frightening investors already anxious over Europe’s worsening debt crisis.

Last week, Fitch Ratings said France’s debt and deficit levels remained consistent with a triple-A rating but the euro zone’s No. 2 economy would have limited room to absorb new shocks to its public finances without endangering that status.

(Reporting by Catherine Bremer, Leila Abboud and Blaise Robinson in Paris and Cecile Lefort in Sydney)

Mochila insert follows.

Reuters
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