French borrowing costs spike as default insurance hits 2025 high
French 5-year credit default swaps hit 41.5 bps and the 10-year spread over Germany topped 100 bps as bond markets sold off.
French government debt came under renewed pressure on Friday, with the cost of insuring it against default climbing to its highest level since April 2025 and the yield premium over German bunds breaching a threshold last crossed during the euro zone debt crisis in 2012.
Five-year credit default swaps on French sovereign debt — instruments that pay out if a borrower fails to meet its obligations — reached 41.5 basis points, the highest since the market turmoil triggered by sweeping US tariffs in April last year. The contracts were up about 2.9 basis points from Thursday's close, marking their sharpest single-day move since mid-March, when the outbreak of war drove volatility across markets.
The spread between French and German 10-year government bonds, a closely watched gauge of the extra compensation investors demand to lend to Paris rather than Berlin, rose above 100 basis points for the first time since 2012.
French bonds have been among the hardest hit in a broad selloff that has swept global fixed-income markets over recent weeks. Yields on the benchmark 10-year French note climbed 10 basis points to 4.456%, leaving France the worst-performing major bond market of the day.
The moves reflect mounting investor concern over the country's fiscal position, which has pushed the premium on French debt to its widest in more than a decade.