The review followed a week of bond selling fueled by violent cost of living protests and political gridlock over €43 billion in proposed 2027 budget cuts ahead of the May 2027 presidential election. France's 10 year government bond yield climbed as high as 5.14% on Friday, its highest since 2002, while the spread over German 10 year bonds reached 178 basis points, the widest since late 2011, on a weekly increase of more than 30 basis points that was the largest in at least 36 years.
Saturday, October 24, 2026
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Moody's Keeps France at Aa3, Defying Downgrade Fears After 10 Year Yield Tops 5%
Global Markets14 hours ago
Moody's kept France's sovereign credit rating at Aa3 on Friday, defying market expectations for a one notch downgrade to A1 and stating the rating assumes a budget that reduces the deficit for 2027 will be adopted. The ratings firm projected a 2027 budget deficit of 5.2% of GDP, noted that slower growth and a wider deficit have pushed the country's debt burden higher since its previous review, and warned that the recent jump in French government bond yields adds to the risk of weaker debt affordability. French Finance Minister Roland Lescure said the decision "recognizes the solidity of the French economy."
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