Moody's expected to downgrade France's credit rating on Friday

Moody's is expected to downgrade France's credit rating on Friday evening, with a rating hold deemed unlikely due to the country's deteriorating public finances. The agency currently assigns France an "Aa3" rating with a negative outlook. The decision follows France's worsening economic indicators, including a projected public deficit of 5.4% of GDP for 2025, higher than expected, and inflation rising to 3.1% in September. Moody's had previously cited legislative capacity, budget deficit reduction, and pension reform as key factors for a potential downgrade. A downgrade to A1 would align France with Fitch and S&P ratings, reflecting concerns over political instability, social unrest, and rising borrowing costs. French ten-year bond yields recently exceeded 5% for the first time since 2002, with the spread over German bonds reaching a record high since 2011.