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Eurozone Credit Convergence: Past Divides Are Closing, the Era of Single-A Ratings Arrives. ⑴ France's recent credit rating downgrade, while Spain's upgrade, has received little attention. This is more intriguing because of the convergence of Eurozone credit and the erosion of the long-standing "core" and "periphery" divide. While Germany may face the risk of losing its AAA rating, the weighted average of Eurozone sovereign credit ratings is moving closer to single-A, in line with the general downward trend in sovereign credit ratings globally. ⑵ While several Eurozone countries, including Germany, France, and Spain, enjoyed AAA ratings before the 2008 financial crisis, countries like Spain have now been upgraded to A+ through robust economic growth (nearly 3%) and effective debt leverage reduction. Portugal has also received a single-A rating from Fitch, and Italy, the Eurozone's second-largest bond market, is also nearing single-A rating with Standard & Poor's. ⑶ Changes in the credit market are reflected in actual borrowing costs. The 10-year nominal yield premium on Italian government bonds over French government bonds has almost disappeared, and Spain's borrowing costs have been lower than France's for nearly a year. Spain's risk premium relative to Germany is at its lowest point in nearly 17 years, while Italy's is at a 16-year low. ECB data shows that the 10-year yield premium of all eurozone government bonds over AAA-rated bonds is currently just 47 basis points, well below its 2022 peak and 20 basis points narrower than a decade ago. (4) The market's muted reaction to France's rating downgrade suggests its problems are more political than financial. A single A rating has become the new normal for eurozone sovereign credit, and the "core-periphery" credit divide appears to be a thing of the past, potentially facilitating more attractive joint lending in the future.