FRANCE: Moody’s Downgrades France’s Government Bond Ratings to Aa2 from Aa1 Outlook Changed to Stable from Negative

Monday September 21 2015

Moody`s Investors Service has downgraded France`s government bond ratings by one notch to Aa2 from Aa1. The outlook on the ratings is stable.

The key interrelated drivers of today`s action are:

• The continuing weakness in France`s medium-term growth outlook, which Moody`s expects will extend through the remainder of this decade; and
• The challenges that low growth, coupled with institutional and political constraints, poses for the material reduction in the government`s high debt burden over the remainder of this decade.

At the same time, France`s credit worthiness remains extremely high, supporting an Aa2 rating. The country`s significant strengths include:

1. a large, wealthy, and well-diversified economy with a high per capita income,
2. favourable demographic trends as compared to other advanced economies, and
3. a strong investor base and low financing costs. The rating and its stable outlook are also supported by the country`s efforts to stabilise its public sector finances and initiatives recently deployed or announced to arrest the erosion of the economy`s competitiveness.

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