Moody’s Holds France Rating, Keeps Negative Outlook

Moody's on Friday, Oct. 23, 2026, kept France's sovereign credit rating at Aa3 and retained a negative outlook. The agency said the outlook reflects increased risk that fragmentation of France's political landscape will impair legislative institutions, and that political instability, also visible in current social tensions, risks hampering the government's ability to address an elevated fiscal deficit, rising debt burden, and durable increase in borrowing costs. France's 10-year yield crossed 5% for the first time since 2002, at 5.019%, with the spread to German bunds at a 15-year peak. The deficit is roughly 5.5% of GDP, above the EU 3% limit. More than $1 trillion of French debt matures by 2030, and the finance ministry warned debt-to-GDP is expected to hit 121.7% in 2027. A finance bill targets a 5% deficit next year, down from 5.4%. Prime Minister Sebastien Lecornu lacks a parliamentary majority; lawmakers rejected part of a social security budget bill Friday and sent it to the Senate after more than 500,000 marched the prior weekend. Moody's said it could return the outlook to stable if institutions narrow the deficit. Left-rated outlets cast the decision as a reprieve after crisis; no right-rated coverage is in the record.