Wall Street Responds To The French Downgrade

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


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