UPDATE 1-Moody’s to review France’s outlook over next 3 mths
NEW YORK Oct 17 (Reuters) - Moody’s warned on Monday it
may slap a negative outlook on France’s Aaa credit rating in
the next three months if the country fails to make progress on
crucial fiscal and economic reforms.Moody’s also will take into account any potential adverse
developments in financial markets or in the economy in
assessing the outlook, it said, noting that the government has
now less room to stretch its finances than it did during the
financial crisis of 2008.A negative outlook would be a sign that Moody’s could
downgrade France in the next couple of years.”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.The warning comes as European Union leaders discuss
measures to protect the region’s financial system from an
expected Greek debt default. Those measures should include
injection of capital into banks with exposure to Greek debt.France may face a number of challenges in the coming
months, such as the need to provide additional support to other
European countries or to its own banking system, Moody’s said.For France to maintain a stable outlook on its rating, it
will need to prove its “continued commitment to implementing
the necessary economic and fiscal reform measures,” the ratings
agency said.The government will also have to show “visible progress in
achieving the targeted sustainability improvements” in its debt
ratios, Moody’s said.France’s debt metrics are now among the weakest of its Aaa
peers, the agency said.
