France’s snap parliamentary elections are negative for the country’s credit score, ratings agency Moody’s Investors Service has said.
“This snap election increases risks to fiscal consolidation,” Moody’s said in a statement late on Monday, describing it as “credit negative” for the country’s “Aa2” rating, which is one notch above Fitch Ratings’ and S&P Global Ratings’ equivalent score.
“Potential political instability is a credit risk given the challenging fiscal picture the next government will inherit,” Moody’s said.
Photo: AFP
The “stable” outlook on France’s rating could be cut to “negative” if its debt metrics worsen, it said.
“A weakening commitment to fiscal consolidation would also increase downward credit pressures,” Moody’s added.
French President Emmanuel Macron called a snap legislative election on Monday after a bruising loss in the weekend’s European Parliament vote to Marine le Pen’s far-right National Rally party.
Macron’s unexpected decision, could hand major political power to the far-right after years on the sidelines, and neuter his presidency three years before it ends.
The legislative vote is to take place on June 30, with a second round next month.
Moody’s said the country’s debt burden — already more than 110 percent of GDP — is higher than other similarly rated countries and has seen a near-continuous increase since the 1970s due to consistently large structural budget deficits.
S&P Global downgraded its rating for France earlier this month due to the same concerns.
Moody’s explained what would drive it to follow suit.
“The outlook, and ultimately the ratings, could move to negative if we were to conclude that the deterioration in debt affordability — which we measure as interest payments relative to revenue and GDP — will be significantly larger in France than in its rating peers,” it said.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
CHANGING JAPAN: Nvidia-powered AI services over cellular networks ‘will result in an artificial intelligence grid that runs across Japan,’ Nvidia’s Jensen Huang said Softbank Group Corp would be the first to build a supercomputer with chips using Nvidia Corp’s new Blackwell design, a demonstration of the Japanese company’s ambitions to catch up on artificial intelligence (AI). The group’s telecom unit, Softbank Corp, plans to build Japan’s most powerful AI supercomputer to support local services, it said. That computer would be based on Nvidia’s DGX B200 product, which combines computer processors with so-called AI accelerator chips. A follow-up effort will feature Grace Blackwell, a more advanced version, the company said. The announcement indicates that Softbank Group, which until early 2019 owned 4.9 percent of Nvidia, has secured a
RSS