There were undoubtedly many who heaved a sigh of relief in the corridors of the ministries, at Matignon, Bercy and others. The rating agency S&P Global Ratings (formerly Standard & Poor's) sent a positive signal to the French government this Friday evening by maintaining its rating at the current level: “AA-“, i.e. the fourth level in its ranking, accompanied by a stable outlook.
It’s an understatement to say that the meeting was expected. Approximately every six months, with a few weeks interval, the three main rating agencies on the planet (all American) evaluate the economic health of the country, as well as its capacity to repay its debt. The executive follows the publication of these notes like milk on the fire since they also constitute a good indicator of its ability to pilot the liner France.
“But here, it’s true that we were particularly attentive, given the strong turbulence shaking our country,” confides a cabinet member. And this is the first note that truly takes into account our medium-term budgetary and structural plan (PSMT, which sets the trajectory of public finances with regard to European budgetary rules). This rating is certainly a valuable indicator of the perception that the financial markets have of this government. »
A positive signal
“Despite political uncertainty, we expect France to comply – with a delay – with the European budgetary framework and gradually consolidate its public finances in the medium term,” the American agency said in a press release.
The S&P opinion therefore sends for the moment a positive signal, both economic and financial, to the markets and businesses, but also politically, in response to criticism from oppositions of all sides. Especially since the government is currently under threat of a motion of censure on the three budgets under discussion in Parliament (social security, general and end of management), and which if voted on would lead to its downfall.
“Given the context, this is undoubtedly a way of not throwing fuel on the fire,” said Paul Chollet, chief economist at Crédit Mutuel Arkéa. In May, S&P downgraded France's rating from AA with a negative outlook to AA-. An analysis shared by Marc Fiorentino, specialist in financial markets: “The logic dictated that the agency should not push the country into the ground for the moment,” deciphers the economist. AA-, that remains a very good score, the equivalent of a 16 out of 20. Which does not prevent us from sending signals so that our leaders do not rest on their laurels. » S&P is therefore playing the confidence card, while following the line already drawn by the two other major American agencies.
For the record, in mid-October, the day after the presentation of the next budget by the government, Fitch announced that it would maintain its rating for France at AA-, but with a negative outlook, due to “increased risks linked to to budgetary policy. Two weeks later, Moody's adopted the same tone: no change in the rating (Aa2, the equivalent of an AA at Fitch and S&P), but again with an outlook going from “stable” to “negative”. “, the agency deeming it “unlikely” that the government will succeed in reducing the deficit to 5% next year.
“France remains a very low-risk asset”
“By maintaining its rating, S&P confirms the fact that despite the current difficulties, France remains a very low-risk asset,” adds Bruno De Moura Fernandes, head of macroeconomic research at Coface. The proof is that with each issue of French debt by the Treasury on the bond market, there is always twice as much demand, that is to say buyers, as there is supply. » In its evaluation of the budgets of the Member States, the European Union also judged last Wednesday the 2025 budget submitted by the French executive currently “compliant” with European requirements. Provided obviously that the country is not hit by a new serious crisis of governance.
Because be careful, many experts point out, this relatively good surprise should not make us forget the many other economic indicators currently in the red for France. Starting with an astronomical debt (3,200 billion euros in 2024) and an equally abysmal public deficit (178.2 billion euros forecast for 2024, or 6.1% of gross domestic product, or GDP). “What the markets are looking at above all, and with them the rating agencies, is our ability to straighten the trajectory of our debt in a good direction,” warns Alexandre Baradez, head of Market Analysis at IG France. For the moment, they are still relatively wait-and-see, but if they feel that the efforts are insufficient, that will be the sanction. »
For a few hours on Thursday, France's ten-year borrowing rate reached the same level as that of Greece. A first in its history. And a warning.
“By maintaining France's rating, Standard and Poor's demonstrates the credit granted to the government to reduce the deficit and restore our public finances. The agency, however, underlines the risk associated with political uncertainty which would call into question this trajectory,” reacts Antoine Armand, the Minister of the Economy.
