A participant holds a French flag during a demonstration as part of a nationwide mobilization over rising costs of living, fuel prices and education funding in Paris, France, October 17, 2026.
Ibrahim Ezzat | Anadolu | Getty Images
Moody’s has chosen to maintain France’s credit rating as the country battles a week of civil unrest and heightened political risks.
The agency maintained France’s credit rating at Aa3, a level that Moody’s still considers “highly rated,” but also maintained its negative outlook on the country.
“The negative outlook reflects the increasing risk that the fragmentation of France’s political landscape will continue to undermine the functioning of the country’s legislative bodies,” Moody’s said in a report.
Moody’s said France’s outlook could return to stability if French institutions were able to reduce the budget deficit.
Investors had been anticipating Moody’s rating decision as France, the eurozone’s second-biggest economy, faces protests and a spike in bond yields.
“This political instability, which is also evidenced by current social tensions, risks hindering the French government’s ability to address key policy challenges such as rising budget deficits, rising debt burdens, and sustained increases in borrowing costs, leading to a faster deterioration in France’s key credit indicators than we currently expect,” Moody’s said in a report on Friday.
This week, the country’s 10-year bond yield exceeded 5% for the first time since 2002. Spreads on German federal bonds have also reached a 15-year peak.
Currently, France’s budget deficit-to-GDP ratio is around 5.5%, well above the 3% limit for European Union member states. The country faces more than $1 trillion in debt due by 2030. Just a month ago, France’s finance ministry warned that the country’s debt-to-GDP ratio was expected to reach 121.7% in 2027.
At the same time, France is rocked by protests. More than half a million people marched last weekend to express their dissatisfaction with declining public services and rising costs of living.
S&P Global and Fitch downgraded France’s rating in 2025.
