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It's Official: France Cut To AA+ From AAA By S&P, Outlook Negative
Today's worst kept secret just hit the wires, as S&P announces that it has officially downgraded France
- FRANCE CUT TO AA+ FROM AAA BY S&P, OUTLOOK NEGATIVE
- "we believe that there is at least a one-in-three chance that we could lower the rating further in 2012 or 2013"
- "we believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating,"
One notch, but the negative outlook means a future downgrade is likely.
Full statement below:
France's Unsolicited Long-Term Ratings Lowered To 'AA+'; Outlook Negative
Overview
- Standard & Poor's is lowering its unsolicited long-term sovereign credit rating on the Republic of France to 'AA+'. At the same time, we are affirming our unsolicited short-term sovereign credit rating on France at 'A-1+'.
- The downgrade reflects our opinion of the impact of deepening political, financial, and monetary problems within the eurozone, with which France is closely integrated.
- The outlook on the long-term rating is negative.
Rating Action
On Jan. 13, 2012, Standard & Poor's Ratings Services lowered the unsolicited long-term sovereign credit rating on the Republic of France to 'AA+' from 'AAA'. At the same time, we affirmed the unsolicited short-term sovereign credit rating at 'A-1+'. We also removed the ratings from CreditWatch with negative implications, where they were placed on Dec. 5, 2011. The outlook on the long-term rating is negative.
Our transfer and convertibility (T&C) assessment for France, as for all European Economic and Monetary Union (eurozone) members, is 'AAA', reflecting Standard & Poor's view that the likelihood of the European Central Bank restricting nonsovereign access to foreign currency needed for debt service is extremely low. This reflects the full and open access to foreign currency that holders of euro currently enjoy and which we expect to remain the case in the foreseeable future.
Rationale
The downgrade reflects our opinion of the impact of deepening political, financial, and monetary problems within the eurozone.
The outcomes from the EU summit on Dec. 9, 2011, and subsequent statements from policymakers lead us to believe that the agreement reached has not produced a breakthrough of sufficient size and scope to fully address the eurozone's financial problems. In our opinion, the political agreement does not supply sufficient additional resources or operational flexibility to bolster European rescue operations, or extend enough support for those eurozone sovereigns subjected to heightened market pressures.
We also believe that the agreement is predicated on only a partial recognition of the source of the crisis: that the current financial turmoil stems primarily from fiscal profligacy at the periphery of the eurozone. In our view, however, the financial problems facing the eurozone are as much a consequence of rising external imbalances and divergences in competitiveness between the eurozone's core and the so-called "periphery." As such, we believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating, as domestic demand falls in line with consumers' rising concerns about job security and disposable incomes, eroding national tax revenues.
Accordingly, in line with our published sovereign criteria, we have adjusted downward the political score we assign to France (see "Sovereign Government Rating Methodology And Assumptions," published on June 30, 2011). This is a reflection of our view that the effectiveness, stability, and predictability of European policymaking and political institutions (with which France is closely integrated) have not been as strong as we believe are called for by the severity of what we see as a broadening and deepening financial crisis in the eurozone.
France's ratings continue to reflect our view of its wealthy, diversified, and resilient economy and its highly skilled and productive labor force. Partially offsetting these strengths, in our view, are France's relatively high general government debt, as well as its labor market rigidities. We note the government is addressing these issues through, respectively, its budgetary consolidation strategy and structural reforms.
Outlook
The outlook on the long-term rating on France is negative, indicating that we believe that there is at least a one-in-three chance that we could lower the rating further in 2012 or 2013 if:
- Its public finances deviated from the planned budgetary consolidation path. Budgetary measures announced by the French government to date may be insufficient to meet deficit targets in 2012 and 2013, should France's underlying economic growth in these years fall below the government's current forecast of 1% and 2%, respectively. If France's general government deficit were to remain close to current levels, leading to a gradual increase in the net general government debt to surpass 100% of GDP (from just above 80% currently), or if economic growth were to remain weak for an extended period, it could lead to a one-notch downgrade.
- Heightened financing and economic risks in the eurozone were to lead to a significant increase in contingent liabilities, or to a material worsening of external financing conditions.
Conversely, the ratings could stabilize at current levels if the authorities are successful in further reducing the general government deficit in order to stabilize the public debt ratio in the next two to three years and in implementing reforms to support economic growth.
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Quelle Surprise
France joins the USA in the AA+ club!
Is that like the Mile High Club?
More like the Kilometer High Club.
Actually, if you really want to be properly European, it is spelled
The 'Kilometre' High Club -
Is what you mean like this, video courtesy of the Matt Drudge Report (!)
This is a business promo vid for an American skydiving school - A male instructor and female receptionist, semi-nude in skydiving gear, made a video commercial where they start making love in the aeroplane, and continue while jumping out of the plane, skydiving and opening the parachute ...
And amazingly enough, American regulators at the Federal Aviation Administration, said it was OK, they didn't break any flight rules! ... So a few non-oppressive, non-fascist government bureaucrats left in America, at least.
For those who want to see this 'business promo video commercial' suggested via the Drudge Report, it is here ... adults only, however, it has a little soft nudity ... ahem! ...The 'Alex Torres Sexy Skydive' -
http://www.liveleak.com/view?i=7af_1318741319
@ Mr Lennon
We wish. I was thinking more of a jacuzzi used three times before this afternoon...
And Poor Portugal downgraded to junk!!
How heartless of SnP!
It's all because of speculators. Barosso and von Rompuy should do something about this!
I always get that tingly feeling when we catch up with France... ah no sorry, that's my foot going to sleep.
The dominoes are beginning to fall ... and the house-of-cards is beginning to collapse ...
What will Heli-Ben do?
Something really heli-cool.
lol !
Drudge is already reporting that the next QE is being mulled...
You know to boost our sluggish economy and help out...
I also read the Fed is prepared to buy many long held REOs and rent them out to folks (if this is true its a terrible sign).
I'm thinking he's going to take a roflcopter to the ass on this one.
Is that a rhetorical question?
He will print, of course!!!
Partially correct: Ben will do everything possible to attempt to REFLATE THE BUBBLE, including QE3, QE4, QE5, monetizing the debt, naked printing, purchasing MBS, QE6, QE7, monetizing more debt, operation "super-Twist", operation "ultra-Twist", operation "Super Twister II", operation "Ultra Twist-O-Rama", operation "Twist & Shout", QE8, QE9, operation "Twistin' the Night Away", QE10, QE11, operation "Twisted Sister", QE 12, QE13, ... etc ...
Ben's prime directive: maintain business-as-usual AT ALL COSTS ...
No, pas quelle surprise, I assume u r being ironic. One step closer to the collective cliff...
yep you assumed right...now watch the S&P rally on this....
did Fitch come to the party?
The Uber Corrupt ratings agency Moody's has nothing.
What has Egan-Jones had to say about European sovereign debt?
No idea but their analyst was wearing overalls and carrying a plunger....
They were the first to cut US AAA to AA+ and this: http://online.wsj.com/article/BT-CO-20120112-711732.html
Crazy crazy day. Gotta love the friday post us-close downgrades.
If Germany put on negative watch, does that doom EFSF or kabosh Eurobond concept for overall low enough rates for periphery?
EFSF has been replaced by LTRO
Well hell they certainly cant downgrade countries during the trading day/week....might have caused their precious little equities to fall!
I think Eric Sprott about covered all of this yesterday...the complete farcical nature of the current financial world.
And only momentarily did I turn on the financial news today [totally loving being tv free]...and streaming on Bloomberg today, all they could say was "priced in" and "breakout."
All credibility is now lost in the financial services world. Today it was JPMs confession. C is next. And soon after they are done reporting their fraudulent "earnings" will come the cries for more bailouts.
With every day that passes they give us all more reason to get out.. of everything.
Besides Kabuki, anyboty have a clue what the last two minutes of trading and 10 minutes AH SPX futures was all about?
http://i41.tinypic.com/2a5i439.jpg
(central time on chart snip)
Add in MLK day on monday.
is that the day we get to steal money from the Church and spend on prostitutes in true MLK's tradition
SHHHHHH that's a secret. You're not supposed to know that. He is a saint you know.
FINALLY
and boom goes the dynamite..
WhATabout EFSF?
Germany pays more
The consequences could be dire.
Or not.
I agree. After a few days not much really happened here (after we were downgraded). But, maybe THIS event will cause consequences to become dire. Or maybe Greece defaulting. Or another war in the Middle East. Or more spending and debt by .gov...
Right. Who knows, anymore? Nothing makes sense. We're back in bizarro world.
Does that mean the lesson you didn't want to give me about why this rating garbage is important is cancelled?
No, the lesson I won't be giving you is still scheduled.
Hamsters! We're fsckin' saved! (Eat yer heart out, Trav7777!)
Bizzaro World? You can't handle Bizzaro World! :>D
Since Austria is most likely downgraded, too, the guarantee amount for Germany must rise from 40% to 75% (of those 780bn). Go figure..
Nothing the Rotheschildes haven't done before.
Keep 'em coming
If you all will excuse me ,it's time for a bowel movement. Let me no if there is any important news that hits the wire....on Friday .......after the market closes ..........before a three day weekend.
Maybe the downgrade will get the French off their lazy asses.
Ha ha!
But, did we get off OUR lazy asses after our downgrade?
We did Occupy, but then we fell asleep in our tents and only woke up from pepper spray.
Technically it's only an opinion :D
Technically it was more than just a bowel movement too....but in the end (pun intended) it's all the same thing, a load of crap.
Yo Moma!
Another can crashed while being kicked down..
so what does this mean for tuesday? i'll think i'll go with up 5 instead of up 10.
I thought it was supposed to be BBB+. Surely this will be bullish, since it was only a 1-notch downgrade instead of 2.
Italy
touche./
not really, its all junk now
Oh yeah, definitely. I was talking about my first post ... I was thinking of Italy not France. Didn't mean to imply that this actually changes anything.
Today was a
F)rance
I)taly
G)reece
day!
No FIG Leaf anymore, Emperor!
Italian Pasta with some greek goat cheese and some french bread... A poor man's dinner...
shit, so when does the French Gubmint ask for the resignation of the McGraw Hill CEO, or will they limit to the firing of the highest ranking French speaker with S&P?
Dang! Ya beat me to it! Agreed.....when does the CEO of S&P tender his resignation? Goes to show how rigged and corrupt the entire 'system' is.
It's official!
US military officials tell CNN that ships had 2 close encounters with high-speed Iranian boats in the Strait of Hormuz - Missiles at 11:00Link?
It's on!
And it's on
@natlsecuritycnnhttp://security.blogs.cnn.com/2012/01/13/exclusive-u-s-harassed-by-irani...
"The USS New Orleans, an amphibious transport ship was sailing through the Strait of Hormuz into the Persian Gulf last Friday when three Iranian Navy speed boats rapidly approached within 500 yards of the ship, the official said. The Iranians did not respond to whistle signals or voice queries from the New Orleans. The lack of response disregards standard maritime protocols, the official said. The boats eventually broke away."
Sounds like a dry run?
USS New Orleans was probably drunk
either that or they were taking a pee into the sea, oups. Never play your saxo when you pee into the Arabian sea. "babbbaap ee boom babbaap, I feel so new orleans bloozy woozy, I'm walking on clouds and its raining piss on the passing criters...wat waz tat now, it looked like da goldy fish, no it aint its a canary who caint sing; oh mighddy mighddy meeee..."
Did you guys know there are 3 friday the 13th's in 2012?
S if france loses a rating every friday the 13th... That would mean they would be junk by 2013!
hahaha.....quite an ominous year for our french fried friends!
Italy and Spain cut by two notches. Portugal cut two notches to JUNK. Slovakia and Belgium might be cut too.
The belgium deficit went up from 3% to 4% overnight and that doesn't include a greek default which would raise the deficit this year with 21%
So belgium will lose 2 notches in a logic world and 1 notch in a drunk world.
Aaannd the UK is still AAA.
Take that Frenchies. See what you get when you don't know what the fuck you are doing? Oh come on. A central bank that won't inflate the fuck out of the currency? What's the point?
Betcha Germany loses AAA before the UK.
Y'know, the pounds going back to 1.60. Damn, shoulda held on to my gilts.
Absolutely Germany will lose AAA before the UK.
Well, there is a preference, here:
"we believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating,"
Follow the instructions, follow the instructions...
President Hollande
Ridiculous that Germany is still AAA. Any country that doesn't control the issuance of its currency is NOT AAA.
What are you talking about? Germany is one of 3 remaining eurozone countries that do not want to print in order to lower their debt (or make it more manageable).
Sacre bleu!
Quel dommage!!
Dollar still up. US equities indices holding up nicely 15% from all-time highs. WTI near $100. Not sure how/if QE will factor into the next 1-3 months, but seems FED backed into a corner on what to do next. Maybe they do nothing.. The downgrade seems priced in, or one would think there would be a bigger sell-off today. Can't figure out why Dominos and Starbucks aren't priced 25% lower....
http://www.henryjacksonsociety.org/henryjacksonsociety/hjsuserfiles/image/sarkozy-angry.jpg
http://www.ejc.net/uploads/media_landscapes/sarkovampire.png
ratings are still a FARCE
Do you think Mario DraghiQueen would have left things alone with his view that things were stabilizing if he knew about the downgrades?
Draghi Says Weapons Working After ECB Postpones ‘Armageddon’http://www.businessweek.com/news/2012-01-13/draghi-says-weapons-working-after-ecb-postpones-armageddon-.html
Jan. 13 (Bloomberg) -- European Central Bank President Mario Draghi says his strategy for battling Europe’s debt crisis is starting to work.
It looks like the weapons are pointed at him now!
Say bye bye to that twat Sarkozy... say hello to the national front!
You see! I told you they wouldn't downgrade france three notches! ;)
Oh you kid! LOL.
As much as I would love to see it crash, nothing serious is going to happen.
When the US was downgraded ithe market went down a bit, a few weeks after that the market was right back up. It's a all a fucking game. The market goes down, then it floats back up as if by magic.
We need something really serious to happen all of the sudden... something that will scare the shit out of people. Then maybe the market will crash and stay down.
Kang and Kodos are on their way, ran into a bit of space turbulence...
Voila! baisée
Zeff; awesome avatar!!
edited (my bad last para... ignore)
Monday forgotten. Rally!
As a Brit having had to listen to the French government pointing the finger at Britain, and carrying on big time over Cameron not signing the treaty, all I can say is...
HA HA HA... suck on that Sarkosy. S&P have just thrust their 10" pork sword right up the French government's back passage.
Squeel like a pig boy!
S&P: “we believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating”
France to press on with austerity after ratings blow FAIL!
ahahaahahaahahaahaahahahaahahaahahahaahahahahah absolutely incompetent.
Hold on to your bud and kiss your French ass goodbye!
http://www.youtube.com/watch?v=fZ9WiuJPnNA
And yes... The Street makes more sense than MSM at this point in time.