France’s sovereign debt costs surged as bond yields climbed, straining its budget with public debt nearing €3.6 trillion, or roughly 120% of GDP, according to data cited in a CNBC financial report. Rising interest rates have pushed debt servicing costs higher, with a study commissioned by the French Ministry of Economy and Finance projecting a 59% increase in interest expenses by 2030, potentially surpassing defense spending.
The widening spread between French and German benchmark bonds signals growing investor unease over France’s fiscal trajectory. A rare yield inversion has also emerged, with 38% of high-grade French corporate bonds trading at yields below equivalent government debt as of October 7, up from just 12 billion euros at the start of the year. Kevin Thozet, portfolio advisor at Carmignac, attributed the shift to poor visibility on future fiscal policies and fragmented opinions, driving investors toward companies with clearer strategic outlooks.
Selling pressure in French sovereign debt has spilled over into other Eurozone members, with the spread between 10-year Italian government bonds and German Bunds approaching 130 basis points in the first week of October, marking its largest weekly expansion since the pandemic .
