French credit faces rating risks, which may trigger institutional passive selling.

Jin10 data, October 16 news, the upcoming credit rating decisions may inject uncertainty back into the French bond market. The latest political and fiscal crisis has exposed the fragility of France's financial situation and political landscape, which will be an important consideration for Moody's and S&P Global in making key rating decisions in the next six weeks. Some products managed by institutions require that the average rating of the securities held must be at least “AA or above” according to major rating agencies. If either agency downgrades the rating, bond funds with very strict investment standards may be forced to sell off their holdings of French sovereign debt. Claudia Panseri, Chief Investment Officer for France at UBS Global Wealth Management, stated: “If the average credit rating of French sovereign debt declines, the yield premium required by investors for holding French bonds may rise further.” She warned that this could trigger “passive selling by rating-constrained investors.” Moody's plans to release its latest assessment on October 24, while S&P will announce results on November 28.