Moody’s Downgrade Of French Banks Imminent, Risk Waterfall To Follow?
by Tyler Durden
As regular readers may recall, back on June 14, before it became an even bigger pariah in the thoroughly discredited rating agency space due to its refusal to downgrade the US, Moody’s placed French megabanks SocGen, BNP and Credit Agricole on downgrade review, which means that at some point in the future the rating agency would have to cut the banks’ rating from its existing Aa1-2, to Aa3 or even a single A. It is true that when it comes to downgrade reviews the rating agencies are notorious for being as unpredictable in their timing as they are conflicted in their rating: for example even though Belgium was supposed to be downgraded months ago due to the fact that it continues to be the longest running modern anarchy, nothing has occurred, as political interests are obviously pushing the raters to do as paying clients request, not as reality demands. Alas, for France, which is very sensitive to any inkling it may have a less than sterling rating (due to its sovereign AAA requirement without which the EFSF/ESM falls apart), the luck may have run out. Bloomberg reports that the abovementioned banks “may have their credit ratings cut by Moody’s Investors Service as soon as next week because of their Greek holdings, two people with knowledge of the matter said.
Bloomberg continues: “Cuts are expected next week as the review period concludes, said the people, who declined to be identified because the matter is confidential.”