Moody's says it could downgrade French rail group

25th June 2010, Comments 0 comments

The ratings agency Moody's warned Friday that it could downgrade its rating on French rail operator SNCF because the group could lose some state financial support as the EU rail sector opens to competition.

Moody's maintained its AAA rating on the SNCF but lowered its outlook on the company from stable to negative, signalling that the rating itself could eventually be lowered as well.

At the moment the SNCF rating is tied to that of the French state, but Moody's said eventually there could be a "differentiation between the sovereign and SNCF's ratings."

Moody's said that "as the railway market in the European Union opens to competition, the very close link of the SNCF to the French state might gradually loosen and that the French state could face hurdles to maintain the level of support currently available to the company."

The agency put the amount of rated SNCF debt at around 18 billion dollars (14.5 billion euros).

Another agency, Standard & Poor's, earlier this month downgraded debt held by the SNCF, also because European Union regulations could impose constraints on future state aid to the company.

The ratings agency said it had lowered its assessment on the SNCF to AA+ from AAA.

© 2010 AFP

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