Dreaded by the government, the downgrading of France's credit rating carried out on Friday by the Fitch agency should have few immediate consequences for Paris, whose debt remains sought after by investors.
Like the other two major rating agencies (S&P and Moody's), Fitch regularly assesses the ability of States to repay their debt, by assigning them a rating materialized by letters.
The best rating is AAA (best credit), the worst is C or D (default) depending on the agency.
What did the Fitch agency do on Friday?
On Friday, France's rating was downgraded by one notch, to "
AA-
", against "
AA
" previously.
To justify its decision, Fitch mentions in particular “
significant budget deficits and modest progress
” concerning their reduction, after three years of abundant public spending intended to cushion the shock of Covid and inflation.
With a double A, the French debt is still considered to be of "
very good quality
" by the agency and remains popular with investors, who appreciate the security of this investment.
But it was downgraded to the last level before the simple A, which corresponds to a credit of "
good quality
".
Fitch's decision "
goes against what the government could expect
" after the adoption of the pension reform, supposed to "
show the markets that it had credibility in controlling long-term budget balances
", has commented Saturday on franceinfo the economist of the OFCE Mathieu Plane.
What precedents?
Certainly unpleasant, Friday's episode is less significant than France's loss of its triple A - S&P and Moody's deprived Paris of this sesame in 2012, Fitch in 2013.
“
It was a leap into the unknown
,” Anne-Laure Kiechel told AFP in early March.
“
At that time, we say to ourselves that we can have certain investors who will participate less
” in the purchase of French debt on the markets, adds the founder of the firm Global Sovereign Advisory, specializing in state debt.
Currently, the S&P (AA with negative outlook) and Moody's (Aa2, stable outlook) agencies both attribute the third best possible rating to France.
The first must update its rating on June 2.
What consequences?
On Saturday, the Minister of the Economy Bruno Le Maire sought to reassure by reaffirming to AFP the government's desire to "
pass structural reforms for the country
".
On Friday, Fitch called the strong social tensions around the pension reform a "
risk to the reform program
" of President Emmanuel Macron.
On the issue of debt, "
do not doubt our total determination to restore the nation's public finances
", insisted Bruno Le Maire on Saturday.
During the loss of triple A in 2012-2013, France "
did not lose investors
" on its debt, assures Anne-Laure Kiechel.
Several other European countries had also been downgraded by the agencies, which had put into perspective the seriousness of the episode for the markets.
But "
there are more critical ratings: if we went to simple category A, there it is possible that some investors
" buy less French debt, warns Ms. Kiechel.
"
If there is a form of loss of credibility of France on the capacity to repay its debt, it may be led to borrow more expensively on the markets"
and therefore to pay more interest, recalls Mathieu Plane.
“
This would strain public finances or budgetary leeway.
»
France in the middle of the pack
Among the major European countries, France is rated less well than Germany (triple A by the three major agencies).
But Berlin is an exception, at a time when Moody's threatens to downgrade Italy by one level to classify its debt in the unenviable category of speculative investments.
Another heavyweight in the European economy, Spain is also less well rated than France, unlike the Netherlands (triple A).
Whatever their profile, all European countries have been faced with a sharp rise in interest rates since 2022, which increases the cost of their debt.
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