FRANCIA: perde la “tripla A” di rating. Moody’s colpisce ancora.

Moody’s per la cronaca fa quello che S&P ha già fatto tempo fa…

Moody’s downgrades France’s government bond rating to Aa1 from Aaa,
maintains negative outlook

Frankfurt am Main, November 19, 2012 — Moody’s Investors Service has
today downgraded France’s government bond rating by one notch to Aa1 from
Aaa. The outlook remains negative.

Today’s rating action follows Moody’s decision on 23 July 2012 to change
to negative the outlooks on the Aaa ratings of Germany, Luxembourg and
the Netherlands. At the time, Moody’s also announced that it would assess
France’s Aaa sovereign rating and its outlook, which had been changed to
negative on 13 February 2012, to determine the impact of the elevated
risk of a Greek exit from the euro area, the growing likelihood of
collective support for other euro area sovereigns and stalled economic
growth. Today’s rating action concludes this assessment.

Moody’s decision to downgrade France’s rating and maintain the negative
outlook reflects the following key interrelated factors:

1.) France’s long-term economic growth outlook is negatively affected by
multiple structural challenges, including its gradual, sustained loss of
competitiveness and the long-standing rigidities of its labour, goods and
service markets.

2.) France’s fiscal outlook is uncertain as a result of its deteriorating
economic prospects, both in the short term due to subdued domestic and
external demand, and in the longer term due to the structural rigidities
noted above.

3.) The predictability of France’s resilience to future euro area shocks
is diminishing in view of the rising risks to economic growth, fiscal
performance and cost of funding. France’s exposure to peripheral Europe
through its trade linkages and its banking system is disproportionately
large, and its contingent obligations to support other euro area members
have been increasing. Moreover, unlike other non-euro area sovereigns
that carry similarly high ratings, France does not have access to a
national central bank for the financing of its debt in the event of a
market disruption.

At the same time, Moody’s explains that France remains extremely highly
rated, at Aa1, because of the country’s significant credit strengths,
which include (i) a large and diversified economy which underpins
France’s economic resiliency, and (ii) a strong commitment to structural
reforms and fiscal consolidation, as reflected in recent governmental
announcements, which may, over the medium term, mitigate some of the
structural rigidities and improve France’s debt dynamics.

In a related rating action, Moody’s has also downgraded the ratings of
Societe de Financement de l’Economie Francaise (SFEF) and Societe de
Prise de Participation de l’État (SPPE) to Aa1 from Aaa. Furthermore,
Moody’s has affirmed the Prime-1 rating of SPPE’s euro-denominated
commercial paper programme. The outlooks on the ratings of the two
entities remain negative. The senior debt instruments issued by the two
entities are backed by unconditional and irrevocable guarantees from the
French government.

RATINGS RATIONALE

The first driver underlying Moody’s one-notch downgrade of France’s
sovereign rating is the risk to economic growth, and therefore to the
government’s finances, posed by the country’s persistent structural
economic challenges. These include the rigidities in labour and services
markets, and low levels of innovation, which continue to drive France’s
gradual but sustained loss of competitiveness and the gradual erosion of
its export-oriented industrial base.

The rise in France’s real effective exchange rate in recent years
contributes to this erosion of competitiveness, in particular relative
to Germany, the UK and the US. The challenge of restoring
price-competitiveness through wage moderation and cost containment is
made more difficult by France’s membership of the monetary union, which
removes the adjustment mechanism that the ability to devalue its own
currency would provide.

Apart from elevated taxes and social contributions, the French labour
market is characterised by a high degree of segmentation as a result of
significant employment protection legislation for permanent contracts.
While notice periods and severance payments are not significantly higher
than they are in other European countries, some parts of this legislation
make dismissals particularly difficult. This judicial uncertainty raises
the implicit cost of labour and creates disincentives to hire. In
addition, the definition of economic dismissal in France rules out its
use to improve a firm’s competitiveness and profitability.

Moreover, the regulation of the services market remains more restrictive
in France than it is in many other countries, as reflected in the OECD
Indicators of Product Market Regulation. The subdued competition in the
services sector also has a negative effect on the purchasing power of
households and the input costs of enterprises. France additionally faces
significant non-price competitiveness issues that stem from low R&D
intensity compared to other EU countries.

Moody’s recognises that the government recently announced measures
intended to address some of these structural challenges. However, those
measures alone are unlikely to be sufficiently far-reaching to restore
competitiveness, and Moody’s notes that the track record of successive
French governments in effecting such measures over the past two decades
has been poor.

The second driver of today’s rating action is the elevated uncertainty
with respect to France’s fiscal outlook. Moody’s acknowledges that the
government’s budget forecasts target a reduction in the headline deficit
to 0.3% of GDP by 2017 and a balancing of the structural deficit by 2016.
However, the rating agency considers the GDP growth assumptions of 0.8%
in 2013 and 2.0% from 2014 onwards to be overly optimistic. On top of
rising unemployment, France’s consumption levels are being weighed down
by tax increases, subdued disposable income growth and a correction in
the housing market. Net exports are unlikely to drive economic activity
in light of reduced external demand, in particular from euro area trading
partners such as Italy and Spain.

As a result, Moody’s sees a continued risk of fiscal slippage and of
additional consolidation measures. Again, based on the track record of
successive governments in implementing fiscal consolidation measures,
Moody’s will remain cautious when assessing whether the consolidation
effort is sufficiently deep and sustained.

The third rating driver of Moody’s downgrade of France’s sovereign rating
is the diminishing predictability of the country’s resilience to future
euro area shocks in view of the rising risks to economic growth, fiscal
performance and cost of funding. In this context, France is
disproportionately exposed to peripheral European countries such as Italy
through its trade linkages and its banking system.

Moody’s notes that French banks have sizable exposures to some weaker
euro area countries. As a result, despite their good loss-absorption
capacity, French banks remain vulnerable to a further deepening of the
crisis due to these exposures and their significant — albeit reduced —
reliance on wholesale market funding. This vulnerability adds to the
government’s contingent liabilities arising from the French banking
system.

Moreover, France’s credit exposure to the euro area debt crisis has been
growing due to the increased amount of euro area resources that may be
made available to support troubled sovereigns and banks through the
European Financial Stability Facility (EFSF), the European Stability
Mechanism (ESM) and the facilities put in place by the European Central
Bank (ECB). At the same time, in case of need, France — like other
large and highly rated euro area member states — may not benefit from
these support mechanisms to the same extent, given that these resources
might have already been exhausted by then.

In light of the liquidity risks and banking sector risks in non-core
countries, Moody’s perceives an elevated risk that at least part of the
contingent liabilities that relate to the support of non-core euro area
countries may actually crystallise for France. The risk that greater
collective support will be required for weaker euro area sovereigns has
been rising, most for notably Spain, whose economy and government bond
market are around twice the combined size of those of Greece, Portugal
and Ireland. Highly rated member states like France are likely to bear a
disproportionately large share of this burden given their greater ability
to absorb the associated costs.

More generally, further shocks to sovereign and bank credit markets would
further undermine financial and economic stability in France as well as
in other euro area countries. The impact of such shocks would be expected
to be felt disproportionately by more highly indebted governments such as
France, and further accentuate the fiscal and structural economic
pressures noted above. While the French government’s debt service costs
have been largely contained to date, Moody’s would not expect this to
remain the case in the event of a further shock. A rise in debt service
costs would further increase the pressure on the finances of the French
government, which, unlike other non-euro area sovereigns that carry
similarly high ratings, does not have access to a national central bank
that could assist with the financing of its debt in the event of a market
disruption.

Today’s rating action on France’s government bond rating was limited to
one notch given (i) the country’s large and diversified economy, which
underpins France’s economic resiliency, and (ii) the government’s
commitment to structural reforms and fiscal consolidation. The limited
magnitude of today’s rating action also reflects an acknowledgment by
Moody’s of the French government’s ongoing work on a reform programme to
improve the country’s competitiveness and long-term growth perspectives,
with key measures expected to be outlined in the National Pact for
Growth, Competitiveness and Employment. Moreover, on the fiscal side, the
European Treaty on the Stability, Coordination and Governance of the
Economic and Monetary Union (TSCG), known as the “fiscal compact”, will
be implemented through the Organic Law on Public Finance Planning and
Governance.

RATIONALE FOR CONTINUED NEGATIVE OUTLOOK

Moody’s decision to maintain a negative outlook on France’s government
bond rating reflects the weak macroeconomic environment, and the rating
agency’s view that the risks to the implementation of the government’s
planned reforms remain substantial. Moreover, Moody’s currently also
holds negative outlooks on those Aaa-rated euro area sovereigns whose
balance sheets are expected to bear the main financial burden of support
via the operations of the EFSF, the ESM and the ECB. Apart from France,
these countries comprise Germany (Aaa negative), the Netherlands (Aaa
negative) and Austria (Aaa negative).

WHAT COULD MOVE THE RATING UP/DOWN

Moody’s would downgrade France’s government debt rating further in the
event of additional material deterioration in the country’s economic
prospects or difficulties in implementing reform. Substantial economic
and financial shocks stemming from the euro area debt crisis would also
exert further downward pressure on France’s rating.

Given the current negative outlook on France’s sovereign rating, an
upgrade is unlikely over the medium term. However, Moody’s would consider
changing the outlook on France’s sovereign rating to stable in the event
of a successful implementation of economic reforms and fiscal measures
that effectively strengthen the growth prospects of the French economy
and the government’s balance sheet. Upward pressure on France’s rating
could also result from a significant improvement in the government’s
public finances, accompanied by a reversal in the upward trajectory in
public debt.

COUNTRY CEILINGS

France’s foreign- and local-currency bond and deposit ceilings remain
unchanged at Aaa. The short-term foreign-currency bond and deposit
ceilings remain Prime-1.

Quando la stessa sorte toccherà per la Gran Bretagna, Germania, Giappone e USA. Una volta a una simile notizia il CAC avrebbe perso il 3%, ora è in linea globalizzata con le altre borse anche segno che ormai le notizie ( come anche tu puntualizzi) sono scontate e che questi voti/valutazioni ormai valgono poco, soprattutto per la poca affidabilità di chi li emette.