2023-04-30 07:48:21
Three agencies rain or shine on the financial markets, producing essential information for investors enabling them to analyze the risks: Fitch, which has just downgraded France’s rating, Moody’s and Standard & Poors, which will return its note next June. They build the reputation of States, assessing their ability to repay their debt and the loans contracted.
Their ratings are important because they are scrutinized by investors who, depending on the results, will agree to lend to such and such a State, at such and such a rate. If you are poorly rated, your borrowing rate will be particularly high.
If France has lost its AA, the AA- grade still ranks it among the “good” students. However, this degradation is a very bad signal. Some economists believe that it might lead to a further jump in interest rates, with direct consequences on households’ access to credit. A position that is not shared by all the experts. On the other hand, this risks complicating the task for public finances. The markets will scrutinize, day following day, the action of the State to reduce its debt. This reduces the political margin to take measures such as lowering taxes.
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