Morgan Stanley has downgraded France Télécom despite having led numerous investment banking deals for the debt-laden telecoms provider over the past few years.

The downgrade by Morgan Stanley, which was tipped to work on France Télécom's proposed rights issues, comes as banks globally face criticism for their research being influenced by investment banking relationships. Morgan Stanley, which is itself fending off a lawsuit from LVMH over allegedly biased analyst reports on the luxury goods sector, cut its rating on France Télécom stock from equalweight to underweight on news that the ailing company could receive a cash injection.