You may remember that a rumor of this a few weeks ago caused a brief market collapse - which reversed after it was shown to be false. Well...
France’s AAA Status in Tatters as Yields Surge
By Mark Deen and Paul Dobson - Nov 22, 2011 6:02 AM ET
Bloomberg.com
Investors aren’t waiting for Standard & Poor’s or Moody’s Investors Service to strip France, Europe’s second-biggest economy, of its top credit rating.
The extra yield demanded to lend to AAA rated France for 10 years was 158 basis points more than the German rate at 11:51 a.m. today. The gap was 200 basis points on Nov. 17, the widest spread since 1990, up from 28 in April. The French 10-year yield was at 3.5 percent, about midway between top-rated Holland and Belgium, which is graded one level lower at Aa1 by Moody’s. French borrowing costs are more than a percentage point above the AAA rated U.K.
“France isn’t trading like a AAA,” said Bill Blain, a strategist at Newedge Group in London, who recommends buying U.K. government debt. “The market has made its judgment already.”
The debt crisis that began more than two years ago in Greece and snared Ireland, Portugal, Italy and Spain is close to reaching France. Moody’s said in a report published yesterday that any persistent increase in borrowing costs would amplify the French government’s challenges as economic growth slows.
President Nicolas Sarkozy has unveiled two sets of budget cuts since August to preserve the credit rating and try to calm jittery markets. Two-year yields on French debt have climbed 55 basis points since Aug. 31 to 1.67 percent, while the rate on German notes of similar maturity fell 30 points to 0.42 percent.
“The market is concerned about the dissolution of the euro itself, hence only bunds are acting as a safe haven,” said Richard McGuire, a fixed-income strategist at Rabo Bank International in London. Germany is the region’s largest nation.
Full story: http://www.bloomberg.com/news/2011-11-22/france-s-aaa-status-in-tatters-as-yields-surge.html
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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