French 10-year risk premium soars to highest since late 2011

The premium of French 10-year government bond yields to safe-haven German ones rose to above 150 basis points on Friday, its highest since late 2011, as worries about France's finances and political turmoil grew.

Government bonds worldwide have been under pressure recently given the backdrop of elevated energy prices, rising inflation and higher interest rate expectations, but French debt has been hit even harder by concern about the government's ability to cut spending and improve its finances ahead of the 2027 presidential election.

This difference, or spread, between French and German sovereign bond yields reflects the additional premium investors demand for the risk of lending to the French government rather than the German one over 10 years


The German 10-year bond yield was last down 8 basis points at 3.437%, while the French 10-year yield was roughly unchanged on the day at 4.929%

France on Thursday presented its 2027 budget bill, seeking to enact unpopular belt-tightening measures that can lower its deficit

The budget presentation however gave French bonds only little relief, and investors sought out safe havens like German debt