Yield on French bonds hits highest level since 2002

The yield on the French 10-year OAT has risen to 4.92%, reaching its highest level since July 2002. The news currently comes from a single source (MilanoFinanza); no independent confirmation is available. The figure comes amid growing tension over French government bonds, closely watched by European investors.

The spread over the German Bund of equal duration has widened to 152 basis points, the widest differential since 2011. A level that reflects, according to reports, growing investor unease over rising French debt, a concern that has translated into a higher yield demand from those buying Paris’s public debt.

By comparison, the Italian 10-year BTP currently yields 4.65%, with a spread of 120 points. The gap between the two European government bonds, the French and the Italian, signals how the market is now rewarding Italian debt over French debt, a reversal of perception compared to the years when France was considered a more solid issuer than Italy.

The widening of the French spread over the Bund to 152 points, the widest since 2011, comes at a time when European bond markets remain under scrutiny over uncertainties tied to public finances in several eurozone countries. The 4.92% yield on the 10-year OAT represents the highest point reached by the French bond in over two decades.

The differential between Paris and Berlin remains the figure to watch in the coming sessions: a level of 152 basis points had not been recorded since 2011, and the 4.92% yield brings the French OAT back to values not seen by the market since 2002.