Sarkozy: Downgrade changes nothing
Monday, January 16, 2012
MARDID (AP) — French President Nicolas Sarkozy on Monday shrugged off his country’s loss of its prized AAA debt rating, saying the downgrade by rating agency Standard & Poor’s would change nothing.
The comments, his first since S&P lowered its score on France and eight European other countries on Friday, followed a successful auction by France of $10.9 billion in short-term debt Monday. The yields, the interest rates charged by investors on the debt, fell — a sign investors still see the country as a good bet.
France won a further small reprieve Monday, when the Moody’s agency confirmed that it would keep its top rating. However, the S&P decision could seriously impair Sarkozy’s bid for re-election this spring.
Sarkozy said he was unconcerned with the opinions of ratings agencies.
“We have to react to this (the downgrade) with calm, by taking a step back,” he said at news conference with the new Spanish Prime Minister Mariano Rajoy. “At the core, my conviction is that it changes nothing.”
Sarkozy said the ratings agencies’ decisions would not affect his policies, though he did acknowledge that France has work to do, saying that its deficits and spending were too high and that its growth was too slow.
He also noted that two of the three major agencies still rate France at Triple A, the highest rating. Fitch confirmed the rating last week. The S&P move was especially brutal for France, one of the world’s biggest economies and a financier of bailouts for smaller, poorer eurozone countries.
There are more government auctions in Europe this week, including longer-term offerings from France on Thursday, so the European debt crisis will never be too far from investors’ minds.
The news conference began combatively when Sarkozy refused to answer a question about whether France’s downgrade would affect its ability to lead Europe out of the crisis and if it had any connection with the meeting between the French, Italian and German leaders scheduled for next week being postponed.
Sarkozy and German Chancellor Angela Merkel have taken the lead in proposing solutions to the crisis and major decisions are often hashed out at their meetings ahead of European summits.
“You don’t have the latest information,” Sarkozy blithely told the reporter, apparently referring to Moody’s decision on Monday. The reporter rephrased the question two more times, but Sarkozy again refused to answer.