Moody's spared France a credit rating downgrade on Friday, concluding a periodic review that left the country's rating at Aa3 with a negative outlook, Reuters reported. The decision eased pressure on a government struggling to contain social unrest and shore up strained public finances.
Source: Reuters, Oct 23, 2026
Moody's kept the rating at Aa3, citing France's diversified economy and strong public institutions, Dow Jones Newswires reported. It said this was not a credit rating action and was not an indication of whether a rating action is likely in the near future. CNBC reported that Moody's maintained the negative outlook, saying: "The negative outlook reflects the increased risk that the fragmentation of France's political landscape will continue to impair the functioning of the country's legislative institutions."
Source: Dow Jones via Morningstar, Oct 23, 2026
"A significant and sustained fiscal effort will still be needed beyond the presidential elections of April and May 2027 to bring France's public finances onto stronger footing and stabilise a debt burden that will exceed 120% of GDP in 2027," Moody's said, according to Dow Jones. The Aa3 rating assumes France successfully adopts a deficit-reducing budget for 2027, the agency added.
Source: Dow Jones via Morningstar, Oct 23, 2026
France's budget deficit is expected to reach around 5.4% of GDP this year, public debt is approaching 120% of GDP, and the International Monetary Fund expects the French economy to grow just 0.4% this year, compared with 1.1% for the eurozone, Dow Jones reported. French bond prices have fallen more sharply than peers, pushing the premium over German borrowing costs to 170 basis points, and France has faced higher borrowing costs than Italy and Greece.
Source: Dow Jones via Morningstar, Oct 23, 2026
The decision leaves Moody's rating of France above Fitch Ratings and S&P Global Ratings, which cut the country to A+ in 2025; Moody's had downgraded France from Aa2 to Aa3 in late 2024, Dow Jones reported. S&P is scheduled to conduct the next review of France's rating on November 27. Prime Minister Sebastien Lecornu welcomed the hold on X, saying it contradicted pessimistic predictions, according to reporting summarised by Le Monde.