French Debt: Risk Premium Climbs to 74 Basis Points Against Germany
OAT at 3.69%: A Widening Gap with Berlin
The yield on the 10-year French OAT increased to 3.69% on Friday evening, up from 3.63% on Thursday, marking a rise of 6 basis points during the day. Meanwhile, the German Bund experienced a slower increase of 2 basis points to 2.95%, also reflecting upward pressures on interest rates in the eurozone.
The spread between these two benchmarks thus stands at 74 basis points, significantly higher than the 30-day average of 63.9 basis points. The spread is now 10.1 basis points above this average, confirming a clear and swift deterioration in the perception of French sovereign risk.
The one-month trend is telling: the spread was still fluctuating around 59 to 62 basis points at the end of February, before starting a gradual upward trend that accelerated this week. It breached the 66, 70, and then 74 basis point thresholds over the span of five sessions.
A Tension Signal Confirmed, Far from Crisis Peaks but Clearly Deteriorating
The current spread remains far from the historical peak recorded on November 17, 2011, during the height of the European sovereign debt crisis, when the OAT/Bund spread reached 225.1 basis points. However, the current signal is described as « high tension": the premium required to hold French debt over German is deteriorating at a rate that cannot be ignored.
This increase in the implicit financing cost occurs amid ongoing concerns about France's budget trajectory. Each additional basis point mechanically increases the future interest burden for the government, in an environment where France needs to refinance substantial volumes of debt.
In the equity markets, the tone remained cautiously negative without being alarmist: the CAC 40 fell 0.91% to 7,911 points and the DAX 0.60% to 23,447.29 points, moderate declines that do not indicate a panic movement. However, the bond markets, though quieter yet more crucial for public finances, are sending a harsher message at the end of this week.
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
