Friday, two o’clock in the morning. On a moonless night, Bruno Le Maire discovers a strange word in the corridors of Bercy, like Remember… last summer : “I know what happened during the last crisis. And it will come back.” A shiver of fear runs down the spine of the Minister of the Economy. But he knows, in a horror film, you cannot escape your dire destiny. This Friday, relentlessly, Standard & Poor’s will communicate its rating on French public debt. It was maintained in June, at the last score, in AA. So she is back, the serial killer of the economy, the amplifier of the crisis, the dismantler of the countries of the South: the rating agency, the big horrible villain with an economic twist.
If the whole of Bercy is shaking its knees, it’s because these agencies have a reputation. Many accuse them of having taken the skin of Greece and of having left Spain, Portugal and other Mediterranean countries in agony, more than a decade ago, during the sovereign debt crisis between 2010 and 2014. More recently, they took up the scythe and the shroud, this time obtaining the skin of Liz Truss, short-lived British Prime Minister in 2022; the latter had made the fatal error of presenting a budget that was a bit too light on spending. You might as well smear your legs with blood and immerse them in water Jaws, or decide to split up in a big haunted mansion.
From debt solvency to an insoluble situation
But let’s leave the Channel and go back in time, towards the endangerment of Southern Europe, ten years ago. To fully understand, Sylvain Bersinger, economist at Astérès, recalls the basics: The goal of rating agencies is to give a rating on the level of solvency, whether for a company or at the level of a State. In other words: assess the ability to repay or not a debt. This rating is then an indicator for the markets from which state or company will borrow money. The more the debt is considered insolvent, the more the borrowing rate increases, because the credit is considered riskier.
At the start of the 2010s, Greece fell into this trap worthy of Saw : its debt is considered too high, so rates are increasing, helped by the lowering of the rating given by the agencies. Moody’s will even go so far as to give Athens a “C”, corresponding to an almost certain risk of payment default. So the debt is more difficult to repay, because the policies to put in place to reduce it, requiring expenditure, are more difficult with the increase in loans. As a result, the debt increases again… You understand the Machiavellianism of the thing.
Subprimes, the original sin
Every good villain demands his origin story to explain why it went so wrong. In the case of rating agencies, it all started with the 2008 crisis. Ironically, the agencies were then criticized for being too lenient towards subprimes – loans granted to financially fragile populations in exchange for risky interest rates. .
Despite the danger – which will eventually explode in the face of the global economy – the rating agencies continue to place their trust in securitization, which consists of exchanging debts from bank to bank without really verifying their validity. origin, notably with these famous subprimes inside. “The banks had lost track with this innovation, and the rating agencies were accused of not having sounded the alarm early enough, of not having seen the toxicity of these maneuvers,” explains Stéphanie Villers, economic advisor. at PwC.
Are rating agencies really bad?
This big miss would have made the rating agencies particularly angry when it came time to sanction Greece. “They may have overloaded the boat a little and overreacted so as not to be accused of laxity again,” recognizes the economic advisor.
But be careful: wouldn’t we be overdoing this role of serial killer? Continuing the metaphor, the rating agency would be more like the creepy music that announces the arrival of the bad guy: it’s never a good sign, but it’s not the culprit. Sylvain Bersinger even believes that “we give far too much importance to rating agencies compared to what they really are. They follow crises more than they provoke them.”
The market, the real killer?
Even in the famous case of the Greek crisis, Sylvain Bersinger recalls: “Whether for subprimes or Greece, the rating agencies gave triple A, the best possible rating, until the eve of the crisis. » Same observation from Christophe Blot, economist at the OFCE and specialist in financial crises: “The rating agencies probably played a role, but they did not do it alone”. Stéphanie Villers finally: “Objectively, it is difficult to deny that the situation of Greek public accounts was catastrophic”.
It is all the more difficult to attribute all these murders to the rating agencies since borrowing rates are not forced to increase in the event of a lowering of the rating, recalls our three experts. Especially if the three rating agencies do not agree with each other. If Standard & Poor’s lowers its rating this Friday, Fitch, another rider of the apocalypse, maintained its rating at the end of October at AA- (it had lowered it last April). Enough to reassure Bruno Le Maire a little. And in any case, “the markets make their own assessments and can decide for themselves whether or not to increase rates. They are the ones who the final decision,” recalls Christophe Blot. Be careful, in horror films, a fake killer can hide another, this time very real.