Egan Jones Downgrades France From AA- To A; Negative Watch, Sees Debt/GDP Rising From 91% to 117% By 2013

Tyler Durden's picture

Only the first of many French downgrades, this time by the rating agency which is always ahead of the pack. And like in Italy's case, EJ sees a soaring French debt/GDP, rising to 117% in 2013 from 91% currently.

Summary note:

Disastrous trend and the worst has yet to come. Over the past two fiscal years, the Republic of France's debt has grown by 21% from EUR1.32 trillion to EUR1.59 trillion. Meanwhile, FYE GDP declined slightly from EUR2.13 trillion as of 2008 to EUR1.93 trillion as of 2010. As a result, debt to GDP rose from 61.8% in 2008 to 82.5% in 2010 and is near 90% currently. As the EU growth slows, and France's unemployment rises, budget pressures will rise. An item which is hard to quantify but is a growing concern is the health of France's banks; the assets of the three largest banks equal 240% of France's GDP. Given France's propensity for supporting its banks, France might soon be confronting a substantial additional liability.


For the most part, over the past 18 months France has been exempted from the rise in funding costs. However, as the crisis evolves, we expect that France will be pressured. The deterioration in France's credit metrics combined with the needed supported for France's banks are likely to pressure the country. A major catalyst is likely to be the year end financials for France's banks; watch for a significant support program to be announced over the next couple of weeks.

Full note - link

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Stagflationary's picture

Ahead of the pack? Can you please show me their track record and how they've been better at predicting default probabilities or changes in spreads? From all I've seen so far they just seem like the rating agency of TTP. 

dtwn's picture

next to the towels and waffle makers.  Black friday 2012!

c'mon man's picture

TD - Did you hear Pisani's comments about Egan Jones on this??

knukles's picture

Vive la FrAA-nce.
Er, FrAnce

Soon to be FraBBBance (Rhymes with Provance)

Or FraCance (Rhymes with NoChance)

I mean, this shit is really getting to be an awfully expensive runt of humor for the Europeans.  Particularly once they're all rated Below BBB thus truly becoming EuroTrash.

Robot Traders Mom's picture

How can you tell a Frenchman has been in your backyard?

Your garbage cans are empty and your dog is pregnant.


-Chris Chambers, brother of 'Eyeball'

Hippocratic Oaf's picture

From FrAAnce to FrAnce. 

Now how 'bout FranCCCe?

RobotTrader's picture


So far, having no impact


Cyclical stocks like X shucking it off,  up 12% today.

Retail stocks like HD and WMT near 52-week highs

New world record highs on PM and MO.

XRT within a few dollars of all - time highs.

Where's the "bear market"?

I don't see it.

Johnny Yuma's picture

Yeah, those stocks constitute the overall market sentiment, lol!!! Never mind that the global central banks had to conduct a coordinated effort to make another stick save. 

Tsar Pointless's picture

The "bear market" is in the same place as is the depression/recession.

In my house.

If everything is so damn great, RoboTrader, then why am I and nearly 3,000 other employees at my company set to be dismissed within the next month or so?

Until and unless the S&P gets over 1240, I'm seeing this up move as a rally within a downtrend wave.

If it doesn't, my next price target is 862. By next Friday.

distopiandreamboy's picture

I can hear the margin calls already! Really, 862? I guess time will tell

centerline's picture

Sorry to hear about the impending layoffs. Eventually the dominant real-world trend (deflation) will crash over us like tsunami. Doesn't matter what the monetary trend is really - except in how one hedges against reality.

fuu's picture

Don't look at the chart.

somethingisrotten's picture

MoMo Lizard, how do you like the bull market in NFLX, FSLR, GRPN, all banks, etc ?????????

You dumb fk.

CvlDobd's picture

Uh XRT is underperforming and the recession is in X.

It's only down 60% YTD. How the fuck is that bullish?

SheepDog-One's picture

RoboTarder only looks at 5 minute charts!

homersimpson's picture

I highly doubt he can pay attention to a stock chart that long, let alone remember his stock picks for that length of time.

SokPOTUS's picture

It all tastes better if you put a little "Tarder Sauce" on it.

KenShabby's picture

"I don't see it."

That's what happens when your head is stuck firmly up some banker's ass.

fuu's picture

It's like 2009, again.

The Fonz's picture

Robo is right about this. The market cares nothing for this downgrade (currently), not even a twitch, on a day so massively up that it should be easy to tick off a few points.

 I just got through being hammered stupidly discounting mondays movement upward, thinking there was no reason for it do so. I will not make that mistake moments after learning the lesson.  If the markets moved up without reason due to leaked info, then it can fail to go down based upon leaked info as well. This was already known. If that is the case then there may be a very strong arguement for the market to continue upward. If I knew of this downgrade coming and remained bullish I would  have ruled out the negative consequences that it will imply as a follow on. Could this lack of a reaction imply the plan to deal with the euro is further along than we know, and that it is a bullish outcome?

ActionFive's picture

What part of 100% to GDP with low interest rates even suggests paper "markets" should be traded as real?

Irish66's picture

margin call again?  every downgrade has consequence

rambler6421's picture

I bet the MSM guys will start ripping Egan Jones again.

c'mon man's picture

Right on cue...Pisani just discounted Egan Jones entirely and said to only pay attention to the Big (corrupt)  3

dtwn's picture

haters gonna hate.  hate the game.  not the player.

bbq on whitehouse lawn's picture

Its the Players that make the game.

ItsEvolutionBaby's picture

haters gona hate
potatoes gona potate 

common_sense's picture

Downgrade everything bitchez!!  'cause everything is very large shit !!


New year, new FED "PROMISE" QE...HO HO HO HO HO...

vegas's picture

So what? The HFT's will buy everything in tandem and ES 1500 by 12/31. Since GS isn't long, it could happen. Stolper, please make an equity call!

YesWeKahn's picture

Bernanke will bail them out

Mike2756's picture

That's what i wondered, will this accelerate the dumping of EU zone debt?

hugovanderbubble's picture

Next Country to lose AAA






Peter K's picture

And the Germans will have to raise the French farm subsidy under the CAP. Always good for a few FrF in the national kitty:)

Snakeeyes's picture

We can't save Europe from overspending and too much debt. Look at Italian Industrial Production for a snapshot from why none of this will work.

Global Central Banks “Last Tango in Paris” – “Fire up the printing presses, gang!” Or at Least Lower Swaps Rates 1/2%

darteaus's picture

It's going to be higher than 117% because the GDP is going to shrink by more than they are willing to publicize right now.

Meremortal's picture

Hey all, newbie here. Been lurking for a while. I wonder how bull and bear even applies these days. Got lucky and got out of TZA a few days ago with a small profit. Whew. Still sitting on a Small SDS position that's in the red due to today. France downgraded and DOW up 386. OKayyy. This latest coordinated money toss says we're ALL in trouble, doesn't it? Rock on, players.

Everybodys All American's picture

This is a Federal Reserve rally that has no correlation to the economy. That said the rally is risk on in price of virtually everything and yet sadly no real conviction yet in volume. This is an inflation rally for sure as well. Inflation might be good to erase debt but it sure will not be an economic solution.

The desparation of the central banks move today will eventually expose who was rescued by today's events as well. Enjoy today though and yes this is a bear market rally and yes it is quite normal for a bear market to rally even this hard. Caution your enthusiasm.

falak pema's picture

Hey citizens of USA, just have a look in the mirror. Not that I don't approve your trend to Euro Bashing. Its necesary and salutary. As long as there is a sense of balance. Both the USA and Euroland are guilty as hell in this fake economy.

Hulk's picture

We must be related somehow...

RobotTrader's picture

Lots of anger here.


I can understand why most here are pissed off.

They keep shorting stocks and getting the rug pulled out from under them.

Everyone here trying to get rich off of Armageddon that never happens.

"Gold bitchez!"

"TZA bitchez!"

"FAZ bitchez!"

"This is It!!"

Hey, its not too late to change your attitude, learn to enjoy life, and quit worrying about the end of the world.


bbq on whitehouse lawn's picture

Do you think gold has been a poor investment choice?

homersimpson's picture

You'd probably see less anger if we all knew these stock runups weren't fueled by US taxpayer dollars..

foxenburg's picture

Droll but quite correct. Thus far, at least. There was a Jim Cramer clip a few weeks ago in which he laughed at all the intellectual assessments that everything was about to tank. He said something like We're here to make money, not to be a smarty pants. 

english serf's picture

Who gives a fuck about the french? As homer said - cheese eating surrender monkeys