Moody's Maintains France Credit Rating at Aa3

Moody's Ratings maintained the credit rating of France at Aa3, defying market expectations that the agency would issue a downgrade. While the rating remained stable, the agency kept the outlook negative, conditioning the decision on the assumption that France will successfully implement a budget to reduce its deficit by 2027.

French government bonds experienced immediate relief following the announcement. The 10-year OAT-Bund yield spread tightened to 166 basis points on Friday. This followed a period of significant volatility where the spread had exceeded 170 basis points, marking the highest levels seen since the 2011 sovereign debt crisis.