Ooh La La Moody's Downgrades France

Moody's has downgraded France from AAA to Aa1.

Moody's rationale for the downgrade being that France’s long-term economic growth has been hit by its inflexible labour market and low levels of innovation eroding its competitiveness and industrial base.

It also cited France's exposure to the ongoing Eurozone crisis.

Moody’s is quoted by the Telegraph:

“Further shocks to sovereign and bank credit markets would further undermine financial and economic stability in France as well as in other euro area countries. 

The impact of such shocks would be expected to be felt disproportionately by more highly indebted governments such as France.”

Moody's Cuts EU's Rating

Moody's has cut its outlook on the triple A rating of the European Union to negative.

The cut reflects the credit risks of the EU's key budget contributors.

Moody's is quoted by the Telegraph:

"The outlook change to negative reflects the negative outlooks now assigned to the Aaa sovereign ratings of key contributors to the EU budget: Germany, France, the UK and the Netherlands, which together account for around 45pc of the EU's budget revenue. 

Moody's believes that it is reasonable to assume that the EU's creditworthiness should move in line with the creditworthiness of its strongest key member states."

Moody's Downgrades Greece

Unsurprisingly Greece has been downgraded by another ratings agency. Moody's has cut Greece's sovereign debt rating to the lowest possible level (from C to Ca).

The Ca rating means that the bonds are classed as being in "default".

Moody's are of the view that there is both a "distressed exchange" and "outright default".

Meanwhile, it is evident that (despite what some may claim and hope), the markets do not believe that the bailout is going to work, Zero Hedge reports the following:

"Nevertheless numerous hedge funds have been accumulating a range of Greek bonds that are governed by foreign law in the hopes of of making a legal challenge."

The media will soon begin to leak details of the actual participation rate, this is very likely to be below the percentage in the hype being spewed forth by the politicians.