Moody's holds France's Aa3 rating, waits for clarity on budget

Moody's refrained from any rating action on French debt on Friday, maintaining its Aa3 rating with a negative outlook, contrary to widespread expectations. The agency stated it was not a "credit action," appearing to wait for the situation in France to clarify. The decision comes as France faces a difficult budget process and fears of new street violence. Prime Minister Sébastien Lecornu welcomed the move on X, saying it "foils the declinist predictions" of those speculating on French debt, while Economy Minister Roland Lescure called it "an appeal to responsibility" to adopt a budget reducing the deficit to 5% of GDP. Moody's assumes a 2027 budget will cut the deficit and social tensions will moderate, though it forecasts a 5.2% deficit versus the government's 5% target. Rivals Fitch and S&P rate France A+. French 10-year bond yields hit 5.14% on Thursday, a level unseen since 2002, with S&P's next decision due November 27.