S&P mistake triggers French bond panic

AlarmbellPoliticians are expressing dismay at the power wielded by ratings agencies after Standard & Poor's (S&P) mistakenly downgraded French government bonds in an email alert sent to some subscribers.

The agency put out a correction saying that France still has its triple-A rating, but not before markets reacted by pushing up yields on French 10-year bonds to 3.44%, the highest level since July.

The mistake comes at a difficult time for France, which is struggling to reduce its budget deficit from an expected 5.7% of GDP this year to 4.5% next year. A rise in yields on French bonds would frustrate the country's efforts at a time when its sovereign debt is above 90% of GDP, according to some estimates.

S&P provoked controversy in August when it downgraded the US rating from triple-A to AA+, the first debt downgrade in US history.

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