S&P Global won't rush France rating call despite politics
By Marc Jones
LONDON, July 4 (Reuters) -Credit rating agency S&P Global has downplayed the likelihood of a knee-jerk change to France's credit rating despite the significant reshaping of politics in the country.
France's bond markets have been unsettled in recent weeks after a drubbing at the hands of the far right in recent EU elections drove President Emmanuel Macron to call a snap parliamentary elections.
The second round of those elections will be held on Sunday and though it will influence France's economic policies, S&P's top EMEA analyst Frank Gill signalled it would not instantly impact the country's only recently downgraded AA- rating.
"I don't think it's fast moving credit story," Gill told Reuters. "I think we just need to sit back and see how things play out politically."
S&P isn't due to review its French rating again until Nov. 29 although it can do it earlier if it feels the circumstances warrant it.
Gill pointed out that Paris' spending already means its general government deficit is not likely to drop below 4% of GDP until 2027, by which point its debt-to-GDP ratio will have ballooned a few more percentage points to 112%.
"The question is really, what is the fiscal plan going forward?" Gill said.
In that respect, it will depend on who comes out on top after the weekend elections. Marine Le Pen's far-right National Rally looks to be in the driving seat, but there are signs that other parties are moving to block her.
"The different parties are proposing different (policy) measures, some of them are not even really compatible with our current projections," Gill warned.
"So it really depends on what they do with the 2025 budget - essentially the fiscal mix they propose, whether it can actually then be implemented and how the market responds."
Reporting by Marc Jones; Editing by Anil D'Silva
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