Moody's holds France's Aa3 rating, warns on deficit and political risks

Moody's has maintained France's sovereign debt rating at Aa3 with a negative outlook, avoiding a downgrade despite concerns over public deficits and political instability. The agency said its statement was not a credit action. The decision came as economists had anticipated a downgrade. Moody's conditions its rating on France adopting a 2027 budget that reduces the deficit and achieving social calm, citing risks that political fragmentation could harm institutions. Prime Minister Sébastien Lecornu welcomed the move, while the agency forecasts a 5.2% deficit in 2027 versus the government's 5% target. French ten-year bond yields reached 5.14% on Thursday, the highest since 2002, before closing at 5.01%. Public debt is projected to hit 121.7% of GDP by 2027, with interest costs reaching 91 billion euros next year. S&P will announce its next decision on November 27.