France next to lose her AAA rating

Pimperne1

Guardian:

http://www.guardian.co.uk/business/marketforceslive/2011/aug/10/ftse-loses-ground-french-woes


But attention also moved back to Europe, with news that President Sarkozy was locked in emergency talks with his ministers seeking ways to cut the country's deficit. That prompted rumours that the country was likely to be next to lose its Triple A rating, and also talk that one of its banks could be in trouble in the current financial turmoil, leading to hefty double digit share price falls at the likes of Societe Generale and BNP Paribas. In a note on the rating this week Citigroup said:

We expect that France, with its high public debt and deficit, and popular resistance to cutbacks in its even by euro area standards extremely large welfare state is now likely to be the G7 country at the highest risk of losing its AAA
rating. The markets appear to share this sentiment with French 10-year spreads over German Bunds reaching 16-years highs on Friday.

All this has sent the FTSE 100 down 45.52 points to 5119.40, with UK banks also coming under pressure. Royal Bank of Scotland is 0.79p lower at 25.42p while Barclays - having earlier been boosted by a recommendation from West LB - is now down 6.05p to 173.25p.

tomterm8

Er... I thought S&P confirmed the french AAA today?

edit: see http://www.bloomberg.com/news/2011-08-10/french-aaa-credit-affirmed-by-standard-poor-s-moody-s-amid-market-rout.html

Pimperne1

tomterm8 wrote: »

Er... I thought S&P confirmed the french AAA today?

edit: see http://www.bloomberg.com/news/2011-08-10/french-aaa-credit-affirmed-by-standard-poor-s-moody-s-amid-market-rout.html

Yes, well who would you rather believe, the Guardian or S&P (oooer, might have got that wrong).

StevieJ

tomterm8 wrote: »

Er... I thought S&P confirmed the french AAA today?

edit: see http://www.bloomberg.com/news/2011-08-10/french-aaa-credit-affirmed-by-standard-poor-s-moody-s-amid-market-rout.html

True, but it is the market that decides how dodgy debt is ansdas your article points out, they ain't convinced.

tomterm8

Pimperne1 wrote: »

Yes, well who would you rather believe, the Guardian or S&P (oooer, might have got that wrong).

Er, neither. I have no great confidence in S&P. But I am pretty sure they know whether they are going to downgrade France in the near term.

StevieJ:

People who believe the market determines the price of bonds do not really consider the consequences of the downgrades. AAA rated bonds are considered risk free as far as funding requirements are concerned for most banks of financial institutions. If they are suddenly downgraded, then they are no longer risk free assets.

Or, to put it another way, if France were downgraded, many of her banks would find they had to put up extra collateral when seeking funding from the market, several probably couldn't do so, and they would go titsup. In addition, most french banks would also be downgraded, since they invest heavily in French bonds, and so their funding costs would also increase that way.

edinburgher

Is France a ship? Didn't realise countries were ladies

Thrugelmir

tomterm8 wrote: »

since they invest heavily in French bonds,

French banks have a $93 billion exposure to Greek debt alone..........

Generali

edinburgher wrote: »

Is France a ship? Didn't realise countries were ladies

France and Britain are both female and are represented by Marianne (actually she represents the French Republic rather than France) and Britannia respectively. No idea if that extends to all countries though.

DiggerUK

Pimperne1 wrote: »

....We expect that France.....is now likely to be the G7 country at the highest risk of losing its AAA .....

Quelle f*cking surprise mon ami.
..._

Joe_Bloggs

I don't think the Marianne legend has any legs in the UK (Britannia). The Boxing Kangaroo has National personification status in Australia according to wikipedia. Feel free to edit that entry.
J_B.

DiggerUK

Generali wrote: »

France and Britain...are represented by Marianne.....and Britannia respectively.....

I love it when people talk dirty.

Marianne.

Britannia

..._