France risks losing its top AAA grade as Europe’s debt crisis prompts a wave of downgrades that threatens to engulf the region’s highest-rated borrowers, with Belgium also facing a possible cut, analysts and investors said.
Moody’s Investors Service had said it may lower Spain’s rating, citing “substantial funding requirements,” and slashed Ireland’s rating by five levels. Standard & Poor’s is reviewing its assessments of Ireland, Portugal and Greece. Costs to insure French government debt rose to a record today with the country’s credit default swaps more expensive than lower-rated securities from the Czech Republic and Chile. “Every sovereign may get penalised in the year ahead,” said Toby Nangle, who helps oversee $46 billion as director of asset allocation at Baring Asset Management. “It would be a big deal if France was to have its rating stripped.”
