DEBT FINANCING. French banks braced downgrade credit rating: fonts

PARIS (Reuters)-top of France, banks are preparing for a credit downgrade from Moody's rating likely, sources close to the situation, said on Saturday, further complicating its efforts to ensure that investors are riding out the financing market tensions.
Several sources said Saturday that BNP Paribas (BNPP.PA), Societe Generale (SOGN.PA) and Credit Agricole (CAGR.PA) were waiting for a decision "imminent" of rating agency, which first put them under review for possible downgrade on 15 June.
Moody at the time had quoted French banks exposure to debt economy-structures of Greece as the reason behind the review, which was due to last three months. Outside commentators said they were ready for a ratings downgrade because of increasing borrowing costs before the sovereign debt crisis.
"The decision is imminent," said a source in Paris. "Will probably be a downgrade but is not yet certain".
Creditors of France-two of which own local banks in Greece-have the highest overall exposure database for Greece, according to the Bank for international settlements. They began to take writedowns on their farms of Greek sovereign debt as part of a new rescue package, but some say not aggressively enough.
Greece pledged on Saturday to stay the course of austerity and avoid bankruptcy as anger over the country's failure to meet budgetary targets in their rescue EU/IMF reached the boiling point.
The three French banks and Moodys refused to comment for this story. The Agency announced in June it was considering the possibility of cutting the BNP and Credit Agricole by a notch and SocGen for up to two notches because of the level of State aid received in the past.
The long-term debt Ratings of Moody's of BNP, SocGen and Credit Agricole are respectively and Aa1, Aa2, Aa2 by assigning all high-grade financial soundness.
A downgrade, although well-flagged, it would be another reminder of market sentiment to deteriorate as investors off economic slowdown in Europe, stricter capital requirements on banks and the drama unfolds in Greece and in the euro area.
Turbulence of sovereign debt has crushed the stock prices of European banks since the beginning of summer and pushed up the cost of borrowing, especially money markets of the US dollar.
French banks, seen as particularly dependent on short-term financing, are among the hardest hit. SocGen shares fell 57 percent since the end of June and are flirting with levels not seen since March 2009, when Europe was in recession.
SocGen, Credit Agricole and BNP-which together held archrival about 6 billion euros (US $ 8 billion) of Greek sovereign debt at end-March-recently tried to reassure investors in their positions of finance, giving additional disclosures of liquidity, but that failed to halt the sell-off.
Some say that the only way out is for Europe to recapitalise its battered banking sector to better absorb the losses of sovereign debt and to meet more stringent capital requirements. IMF Chief Christine Lagarde has been a vocal proponent of such a measure.
(Additional reporting by Matthieu Protard; Edited by Ruth Pitchford)

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