Moody’s warns of slapping negative outlook on France’s Aaa credit rating
19 Oct 2011
Rating agency Moody's has warned that it may slap a negative outlook on France's Aaa credit rating in the next three months if the costs for helping to bail out banks and other euro zone members stretched its budget beyond a point.
The warning comes as EU leaders thrash out issues to shield the region's financial system from an expected Greek debt default.
Those measures are expected to include injection of capital into banks with exposure to Greek debt.
France and Germany, have two of the strongest economies among the 17-member euro zone. They are pushing a plan to be presented at an EU summit on Sunday to help resolve the region's debt crisis.
Moody's said France's progress on crucial fiscal and economic reforms as also potential adverse developments in financial markets or the economy would also be factored under the review, according to Moody's.
A negative outlook would signal a downgrade of Moody's rating on France in the next couple of years. The ratings agency had placed the US' Aaa rating on negative outlook in August.
"The deterioration in debt metrics and the potential for further contingent liabilities to emerge are exerting pressure on the stable outlook of the government's Aaa debt rating," Moody's said in a statement.
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