The Economic Times reports that investors are taking the lead in telling the French government to prepare for potential financial chaos.
The French 10-year yield is at 3.4%, about midway between toprated Holland and Belgium, which is graded one level lower at Aa1 by Moody's. French borrowing costs are more than a percentage point above the AAA-rated UK. "France is not trading like a AAA," said Bill Blain, a strategist at Newedge Group in London.This bad news comes just one day after Moody's announced that it will need to reconsider France's current AAA credit rating because of its exposure to the debt incurred by Greece and Italy.The lower a nation's credit rating, the more it is charged when it borrows, and thus makes it more difficult to meet financial commitments. It's no surprise therefore that France is in agreement with Germany that treaties might need to be changed to allow for more involvement in the financial affairs of other Euro-currency governments in order to prevent further problems.
"The market has made its judgment already." The debt crisis that began more than two years ago in Greece and snared Ireland, Portugal, Italy and Spain is close to reaching France.