France avoids Moody's downgrade but retains a negative credit outlook

France approached Friday's credit review with concerns about its debt growing alongside political instability and street protests. Franceinfo reported that Moody's was widely expected to lower the country's rating, with another national day of demonstrations due on Saturday.

The pressure was already visible in borrowing markets. According to France24, concerns about public finances had pushed France's 10-year government bond yield above 5%, while cost of living protests added to the strain.

On October 23, investors were awaiting a decision scheduled for after US markets closed, according to MarketWatch. Its coverage also described French debt turmoil spilling into overseas markets.

The verdict defied the expectations described in the earlier coverage. Moody's maintained France's rating at Aa3 with a negative outlook, Infobae reported, despite the deterioration in the country's budget position.

Bloomberg Economics described the decision as a reprieve after a week of crisis marked by surging bond yields, political gridlock and street protests.

Prime Minister Sébastien Lecornu welcomed the outcome. According to Le Monde, he said it confounded the pessimistic predictions of experts and those speculating on French debt.

France has avoided the downgrade that dominated expectations before the announcement. But Moody's kept the outlook negative, Telegraaf reported, so the unchanged Aa3 rating does not amount to an unqualified endorsement.

The decision offers immediate relief without resolving the pressures surrounding it. Infobae reported that the rating was maintained despite budget deterioration, while Bloomberg Economics placed the reprieve against continuing political gridlock and protests.

The next immediate test is on the streets: Franceinfo reported that another national mobilisation was planned for Saturday, October 24. The open financial question is whether France can ease the budget concerns that remained in place when Moody's preserved its rating, according to Infobae.