Standard & Poor's says mistakenly announced French downgrade

10th November 2011, Comments 0 comments

Ratings agency Standard and Poor's said Thursday that it had mistakenly announced to some of its clients that it had downgraded France's top "AAA" credit rating, at a time when many in the markets are speculating on just such a move.

"As a result of a technical error, a message was automatically disseminated today to some subscribers of S&P's Global Credit Portal suggesting that France's credit rating had been changed," S&P said in a statement.

"This is not the case: the ratings on Republic of France remain 'AAA/A-1+' with a stable outlook and this incident is not related to any ratings surveillance activity. We are investigating the cause of the error."

The agency's embarrassing error came as the spread between France's 10-year government bond rates and Germany's hit new record highs, in a sign of markets' failing confidence in non-German eurozone debt.

President Nicolas Sarkozy's government has launched an austerity programme and insists its finances are under control, vowing to balance its budget by 2016 despite the economic slowdown and trouble in eurozone neighbour Italy.

But another ratings agency, Moody's, warned France last month its "financial strength has weakened" and that it was "among the weakest of its AAA peers".

Meanwhile, many commentators warned Thursday that the bond spread with Germany and rising French borrowing costs show that the markets already regard French debt as riskier than its perfect rating implies.

© 2011 AFP

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