PARIS (S&P Global Ratings) --Like many corporations worldwide, the coronavirus pandemic took its toll on French companies in 2020, leading to 35 downgrades last year out of 156 rated companies. Fortunately, extensive French government loans to companies and subsidies to employees temporarily unable to work cushioned the blow.

Although the economic shock from COVID-19 will linger for years to come, in a report released today, S&P Global Ratings said it expects a relative rebound in corporate results for a majority of rated issuers to start in the second part of this year, even as the government gradually removes support schemes and seeks to remedy fiscal deficits. "In general, we don't expect an increase in negative rating actions despite health restrictions, including a second lockdown in November, because our ratings already capture the prospects of muted growth in early 2021," said S&P Global Ratings credit analyst Eric Tanguy in the report, entitled "French Corporates Face An Uneven Climb-Out From COVID-19."

Still, some French companies will rebound better than others. The removal of government support is likely to stress companies with unsustainable capital structures, prompting insolvencies or restructurings. Sectors dominated by small independent businesses, such as restaurants and nonfood retail, will likely struggle to bounce back. Sectors in which the pandemic has durably altered consumer habits are also likely to face difficulties--not least business travel, hotels, leisure and media, and perhaps even business-to-customer services, and office and commercial real estate.

This report does not constitute a rating action.

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