La Tribune Reports S&P May Put France On ‘Negative’ Outlook Within Ten Days

Tyler Durden's picture

For our French speaking readers, this makes it all too clear: "Selon plusieurs sources contactées par La Tribune, l'agence de notation Standard & Poor's pourrait préparer la France à la perte de son "triple A"."

Google Translated La Tribune article:

In ten days, the triple A French risk of being "negative outlook"

New rumor market to offset the rate before the last bond auction OAT of the year this Thursday? Or preparation of minds to the inevitable? According to several sources, Standard & Poor's (S & P) may well announce "shortly" the placement of the AAA rating of France as "negative outlook". This is the first step before the lowering of the rating, the highest, enjoyed the Hexagon. "It could happen in a week or maybe ten days," said a diplomatic source, who adds that there are currently an intense reflection in this direction within the agency.

Threats from other agencies

Another source glide along this announcement should be made public on Friday, but for unknown reasons it was postponed. Ten days, S & P had "accidentally" announced the degradation of France. Soon after, she had confirmed the rating of the country and its "stable outlook". But for several weeks, the French notation is under pressure. The economic downturn makes it less credible because the objectives of reducing deficits displayed by Paris. In late October, Moody's warned that it gave three months to consider whether it should be placed on negative watch the French note.

To avoid a possible negative outlook does not result in a loss of the triple A, two possibilities. Either the economy is improving, which is unlikely in early 2012 according to OECD figures published Monday. Either the government is willing to engage in a third level of rigor, it has always hitherto excluded Valerie Précresse, Minister of the budget.

Borrowing capacity of the European small

For its part, Fitch highlighted the "risks" weighing on the French AAA he nevertheless reaffirmed. If France were to lose its triple A, the European Financial Stability Fund (EFSF) would then see its borrowing capacity significantly reduced. The "strike force" of the EFSF would be unable to respond to attacks against the markets of Italy and against Spain. "If the boss of the EFSF, Klaus Regling, announced Tuesday that the Eurogroup of leverage the fund will not reach 4 to 5, as expected, the European Central Bank remains the only credible option," concludes the source diplomatic, adding that the threat of degradation of France, "especially before the European Council on December 9 dudu, put massive pressure on Angela Merkel on the involvement of the ECB."