S&P may cut France rating outlook: paper

Tue Nov 29, 2011 7:46am EST
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PARIS (Reuters) - Credit rating agency Standard & Poor's could change its outlook on France's AAA rating to negative within days, a French newspaper reported on Monday, adding to fears France may lose its position among the top rank of sovereign borrowers.

S&P declined to comment on the report, based on anonymous sources. If true, it would signal that the risk of a downgrade has risen after months of concern about the impact on French public finances of sluggish growth and the costs of the euro zone debt crisis.

Economic and financial daily La Tribune said S&P -- which on Friday cut Belgium's credit rating to AA from AA+ -- had planned to make an announcement on France the same day but postponed it for unknown reasons.

"It could happen within a week, perhaps 10 days," La Tribune quoted a diplomatic source as saying of a change to the outlook.

The euro briefly dipped on the report, which coincided with news that another rating agency, Moody's, could downgrade the subordinated debt of a swathe of euro zone banks, but edged up against the dollar by mid-morning.

French Finance Minister Francois Baroin said the focus should not be solely on France and that while the euro zone debt crisis was serious, Paris was "clear-sighted" on it.

He also ruled out a third round of budget cuts, as called for by the Organization for Economic Co-operation and Development, which said a likely recession would drag French growth far below government targets next year.

"Everyone is concerned, not just France. It's all the euro zone countries," Baroin told France Info radio, asked about the La Tribune report.

"France is not an island or economically cut off from the world. It depends on different parts of the euro zone for a large part of its economic activity and that's why we are, to a large extent, clear-sighted on the crisis."   Continued...