Scope has completed a monitoring review for the French Republic
Scope Ratings reviews its ratings either yearly, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations. Monitoring reviews are unrelated to the calendar that outlines public finance rating actions.
Scope performs monitoring reviews to determine whether outstanding ratings remains proportionate. Monitoring reviews are conducted either by performing a portfolio review in terms of the applicable methodology/ies, latest developments, and the rated entity’s financial and operational aspects relative to similarly rated peers; or through targeted reviews on an individual credit. Scope publicly announces the completion of each monitoring review on its website.
Scope completed the monitoring review for the French Republic (AA/Stable; S-1+/Stable) on 28 August 2020. This monitoring note does not constitute a rating action nor indicates the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com.
Key rating factors
France’s AA/Stable is supported by the French Republic’s large and diversified economy, its track record of structural reforms and high investment underpinning growth potential, and the favourable debt structure. At the same time, high public debt levels, an extensive fiscal deficit in 2020 and labour market challenges remain structural weaknesses. The Covid health crisis has hit the French economy more severely than most European peers, while its resilient economy, extensive fiscal stimulus measures and increased ECB support programmes soften the shock to the economy’s growth potential at the cost of higher public debt. The Stable Outlook reflects Scope’s view that the risks to the ratings are balanced over the next 12 to 18 months. The ratings could be downgraded if: i) there is a roll-back of structural reforms; and/or ii) fiscal policies become unsustainable. Conversely, the ratings could be upgraded if: i) the process of structural reforms continues; and/or ii) there is a path towards sustained fiscal consolidation.
The methodology applicable for the reviewed ratings and/or rating Outlooks (Public Finance Sovereign Ratings, 21 April 2020) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst Bernhard Bartels, Director
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