Moody's keeps France at Aa3 with negative outlook; Scope confirms Italy's BBB+

Moody's has affirmed France's sovereign rating at Aa3 with a negative outlook, contrary to expectations of a downgrade that would have aligned it with Fitch and S&P. The agency cited France's rich, diversified economy and competent institutions as support, but flagged a divided parliament, political instability, higher debt burden, and slower growth as key credit challenges. Moody's conditions the rating on a 2027 budget that reduces the deficit and easing financing costs and social tensions. Separately, Scope Ratings confirmed Italy's BBB+ rating with a positive outlook, expecting continued fiscal consolidation and debt stabilization around 135% of GDP by 2031, despite a projected deficit widening to 3.4% in 2027.