French default-insurance costs climb to highest level since 2020
Credit default swaps on French government debt rose above 45 basis points, the highest since March 2020, even as French bonds rebounded from last week's selloff.
The cost of protecting French government debt against default rose to its highest level since March 2020, even as French bonds recovered from a sharp selloff the previous week.
Credit default swaps on five-year French sovereign bonds — derivatives that function as insurance for bondholders — moved above 45 basis points, according to LSEG data. The level marks the highest since the early phase of the COVID-19 crisis.
The contracts have climbed by just over 7 basis points since the start of the previous week, the largest week-on-week increase since June 2024. That month, a snap parliamentary election called by President Emmanuel Macron ended in political deadlock, leaving investors uneasy about the durability of France's public finances.
French government bonds, known as OATs, nonetheless rallied on Monday. The yield on the 10-year benchmark fell 11 basis points to around 4.46% as prices rose, pulling the country's risk premium over German debt slightly below the 14-year highs above 100 basis points touched last week.
Despite the rebound, French debt remains the weakest performer among major-economy bond markets in 2026. Ten-year borrowing costs have risen by more than 90 basis points this year, compared with an average increase of 75 basis points across the wider Group of Seven economies.
The divergence underscores persistent investor caution over France's fiscal trajectory, even as the immediate pressure on bond prices eased.