France’s Avoids a Debt Downgrade From Moody’s, but Is Given a Warning

With demonstrations set to resume this weekend in France over the high cost of living and deteriorating school conditions, the government is still trying to contain growing turmoil in its bond market.

This week, investors continued to shun French debt, pushing the yield on 10-year bonds above 5 percent for the first time since 2002, raising the cost of public borrowing. The government got a small respite late on Friday, after the ratings agency Moody’s held the country’s credit rating at Aa3, skirting the possibility of a small downgrade.

But Moody’s noted that the outlook remained negative and that France still needed a “significant and sustained fiscal effort” to stabilize its debt burden.

Concerns about France’s public finances have been building for years, but the situation has escalated in the past several months as borrowing costs rose around the world. That has exposed France’s vulnerability in markets. The country’s debt has grown quickly in recent years and is expected to exceed 120 percent the size of its economy next year.

Article source: https://www.nytimes.com/2026/10/23/business/france-debt-moodys-protests.html