Cost to insure against French default edges higher

LONDON: The cost to insure French government debt against default rose on Tuesday after the sovereign lost another of its top-notch credit ratings.

Moody's Investors Service downgraded France by one-notch to Aa1, leaving it with a negative outlook and citing an uncertain fiscal outlook and a deteriorating economy.

Five-year credit default swaps (CDS) on French debt rose 4 basis points to 93 bps, according to data monitor Markit. This means it costs $93,000 annually to buy $10 million of protection against a French default using a five-year CDS contract.

The level is well below an all-time high of 250 bps hit in November last year, when Italy was at the forefront of the debt crisis and concerns about French banks' exposure to Italian debt were at their highest.