Moody's warns France on possible negative outlook
By Walter Brandimarte
NEW YORK | Tue Oct 18, 2011 8:34am EDT
NEW YORK (Reuters) - Moody's warned on Monday it may slap a negative outlook on France's Aaa credit rating in the next three months if the costs for helping to bail out banks and other euro zone members stretch its budget too much.
The warning comes as European Union leaders are discussing measures to protect the region's financial system from an expected Greek debt default. Those measures should include injection of capital into banks with exposure to Greek debt.
France and Germany are the two strongest economies among the 17 euro zone members, and they are spearheading a plan to be presented at an EU summit on Sunday to help resolve the region's debt crisis.
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A negative outlook would be a sign that Moody's could downgrade its rating on France in the next couple of years. Moody's had placed the United States's Aaa rating on negative outlook in August.
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France may face a number of challenges in the coming months, such as the need to provide additional support to other European countries or to its own banking system, Moody's said.
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But the ability to finance very high levels of debt "rests on investors' confidence in the government's ability and in its willingness to tackle unforeseen challenges," Moody's said in the report.
Full story: http://www.reuters.com/article/2011/10/18/us-france-ratings-moodys-idUSTRE79G6XT20111018
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