Overview

• Standard & Poor’s lowered France to A+/A-1 from AA-/A-1+, placing its bonds on par with Spain, Portugal, Japan and China.
• S&P calls the situation the worst political instability since 1958, pointing to a suspended pension overhaul after the government survived two no-confidence votes.
• The agency expects the 2025 deficit to hold near 5.4% of GDP, warns consolidation will lag, and projects debt rising to roughly 121% of GDP by end-2028.
• The downgrade follows Fitch’s cut to A+ in September and could lift funding costs as spreads stay elevated and some funds with rating limits sell French debt.
• Finance Minister Roland Lescure reaffirmed a goal to reduce net borrowing below 3% of GDP by 2029, as markets await Moody’s review due next week.