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Moody's rating of France's credit to be issued in Q1 2012

Standard & Poor's downgraded France to AA+.

s&p aaa triple-aEnlarge
France, Austria, Italy and Spain have lost their coveted AAA rating from S&P's. (PHILIPPE HUGUEN/AFP/Getty Images)

UPDATE: News agencies including GlobalPost incorrectly reported that Moody's re-affirmed France's top AAA credit rating, despite the downgrade by Standard & Poor's three days earlier. In fact, Moody's announced that its review of France was still ongoing, and that it would issue its findings in the first quarter of 2012. This article has been changed to reflect that.

Ratings agency Moody's re-affirmed that France's top AAA credit rating was under review, following the country's downgrade by Standard & Poor's just three days earlier.

Last Friday, S&P downgraded several euro-zone countries credit ratings, most notably France, which went from AAA to AA+.

Moody's said it would update its position on France later this quarter. Until then, France's triple-A credit rating remains under pressure and on investor radar screens, according to The Wall Street Journal

Moody's said France continued to show commitment to implementing necessary economic and fiscal reforms but warned, "the government has now less room for maneuver in terms of stretching its balance sheet than it had in 2008."

French President Nicolas Sarkozy shrugged off his country's credit troubles at a press conference in Madrid with Spanish Prime Minister Mariano Rajoy: 

"At the core, my conviction is that it changes nothing." Sarkozy defiantly told reporters. "We have to react to this with calm, by taking a step back."

Sarkozy refused to answer a question about whether France's downgrade would affect its ability to lead Europe out of the crisis and said his role was not to listen to what people say "but to pay attention to the real economy." 

The markets took the news relatively well.

European stock markets closed slightly higher on Monday with Germany's Dax index up 1.2%, the UK's FTSE 100 up 0.3% higher, while France's Cac 40 was up 0.9%.

Analysts said the downgrades came as little surprise to investors, given the eurozone's current economic crisis.

More from GlobalPost: Standards & Poor's downgrades France, Austria, Italy and Spain

Update: The ratings agency Standard & Poor's has cut its rating of the euro zone's bailout fund, the European Financial Stability Facility, by one level to AA+, according to Reuters.

In a statement, S&P said the decison necessarily flowed from the agency's cuts to the creditworthiness of Austria and France which were announced three days ago.

"We consider that credit enhancements that would offset what we view as the now-reduced creditworthiness of the EFSF's guarantors and securities backing the EFSF's issues are currently not in place," the agency said in a statement cited by Reuters.

http://www.globalpost.com/dispatch/news/regions/europe/france/120116/moodys-keeps-french-aaa-rating