France could lose its top AAA credit rating as Europe's debt crisis spreads, Bloomberg News reported.

"If problems in the euro zone aren't solved quickly, then the conditions of refinancing will be expensive for these countries and the ratings agencies will do more downgrades," Ralf Ahrens, who helps manage about $20 billion as head of fixed income at Frankfurt Trust, told Bloomberg News. "We already see these dynamics in the market. I see France as a risk."

France, the second-largest economy in the eurozone, would be the biggest victim of the debt crisis that has engulfed Greece and Ireland and could still threaten Spain and Portugal.

On Dec. 15, Moody's Investors Service said it might lower Spain's rating, citing "substantial funding requirements." Two days later, Moody's cut Ireland's credit rating by five levels. Standard & Poor's is reviewing its assessment of Ireland, Portugal and Greece.

Credit default swaps show it's cheaper to insure lower rated securities from countries like Chile and the Czech Republic than it is to insure French debt.

"Every sovereign may get penalized in the year ahead," Toby Nangle, who helps oversee $46 billion as director of asset allocation at Baring Asset Management in London, told Bloomberg News. "It would be a big deal if France was to have its AAA rating stripped. I don't think the likelihood of a downgrade is reflected in the market."

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Bill

Time to downgrade moody's and standard and poors ratings.

December 20 2010 at 4:15 PM Report abuse rate up rate down Reply
blueheron

If I see one more stupid story about the Euro zone, I am going to puke. The credit rating of the US is going to be down-graded long before that of France.
Plus - wasn't Moody's the outfit that gave AAA ratings to all the toxic
mortgage packages? They should be out of business, or at least shut up!

December 20 2010 at 2:59 PM Report abuse rate up rate down Reply
jkennedy806

I would like to propose a downgrade on the ratings companies -- I mean after all, why should trust them, these are the same liars that told the WORLD that those toxic bundled dervatives were AAAA+++ LIARS

December 20 2010 at 11:07 AM Report abuse rate up rate down Reply