Wall Street Responds To The French Downgrade

Tyler Durden's picture

From buy French bonds and the EUR, to sell French bonds and the EUR, every possible opinion is included in the list below.


  • Wider OAT/bund spreads may attract investors after the rating downgrade, head fixed income strategist Christoph Rieger says
  • Cites January move in spreads
  • Sees risk of downgrades in other core countries


  • France downgrade is an omen for Germany’s rating
  • Netherlands and Austria may also face rating action

Credit Agricole

  • Strong buying of French debt to continue, strategist Peter Chatwell says
  • Model shows 7-year non-German core debt expensive vs shorter maturities

RBC Capital

  • Keep buying 5-year French debt after rating cut; move was priced in, note to clients says
  • French spreads were already wider to other top-rated countries
  • Expect EFSF’s Aaa rating to be downgraded by Moody’s in coming days

BNP Paribas

  • EFSF may be downgraded by Moody’s in a few days, BNP says
  • Cites French downgrade, says ESM is different


  • French downgrade highlights rating risks posed by Spain, which Nomura thinks will lose its investment-grade rating


  • “Massive selling pressure” unlikely in event of EFSF downgrade

Societe Generale

  • Luckily for France, global sentiment is “risk on”
  • Prudence is a good strategy going into year-end
  • OLOs will re-converge with OATs, note to clients says

Morgan Stanley (in note before latest rating downgrade)

  • French downgrades may not lead to forced selling
  • No Index-driven selling seen

Source: Bloomberg