France pays above 5% on 10-year debt for the first time since 2002 while S&P Global grades it A+
Moody's rules on France after the US close tonight and a cut to A1, level with S&P Global's A+, is expected. The bond market has already gone further, pricing French debt above Italy, Greece and the United States at yields unseen since 2002.
Vincent Jiang · 3 min read
Moody's decides tonight; the market ruled on Thursday
Moody's−1.55% — Moody's, down 1.55 percent today publishes its regular review of France at 2000 GMT tonight 12. It holds the country at Aa3, on negative outlook since October 2025, and most analysts expect a cut to A1, the equivalent of the A+ S&P Global−1.01% — S&P Global, down 1.01 percent today already gives France 12. A cut would put Moody's in line with S&P and Fitch, which moved earlier 1.
The bond market went further, and faster. France's ten-year OAT, the benchmark government bond, closed at 5.0799% on Thursday, a 24-year high and the first close above 5% since July 2002; the premium over Germany's ten-year Bund stretched to 174 basis points, the widest since 2011 3.
France pays more than America to borrow for ten years
Data
| Value | |
|---|---|
| France (OAT) | 5.08% |
| United States (Treasury) | 5% |
| Germany (Bund) | 3.34% |
France's three largest banks, BNP Paribas, Société Générale and Crédit Agricole, fell between 2.5% and 4.8% on sovereign-debt worries, and the Stoxx 600 banks index lost 3.49% 3.
One firm rates the debt and measures the slump
The complication sits inside one company. S&P Global grades France A+ 2. S&P Global also runs the flash purchasing managers' survey, and on Friday it showed French business activity contracting. The composite index, where below 50 signals contraction, fell to 48.4 from 51.1 in September, below the 50.5 economists expected 5. Firms' expectations for the year ahead sank to a six-and-a-half-year low, tied to the budget fight and the 2027 election 5.
France now pays more to borrow for ten years than Italy, Greece and the United States, and the company grading it A+ is the same one measuring the slump 34.
The same firm also rates the AI build-out
Thursday's Meta−1.36% — Meta, down 1.36 percent today- and Tesla−0.83% — Tesla, down 0.83 percent today-led selloff took the Nasdaq down 2.2%, with Infineon and ASM International down more than 6% 3. Three days earlier, S&P's head of digital infrastructure, Mark Habib, told a London roundtable that "it is safe to assume that there is more (debt) out there that we are not seeing" 6.
S&P expects Amazon−0.72% — Amazon, down 0.72 percent today, Microsoft+0.64% — Microsoft, up 0.64 percent today, Alphabet−0.98% — Alphabet, down 0.98 percent today, Oracle+0.29% — Oracle, up 0.29 percent today, Meta and SpaceX+1.86% — SpaceX, up 1.86 percent today to spend more than $7 trillion on AI through 2030, with negative free cash flow until at least 2027; it cut Oracle to BBB- in July, yet sees no "major disconnect" forcing broader downgrades 67.
Who pays while the ratings catch up
The arithmetic behind A+ is public: gross debt at 119% of GDP, a deficit above 5% with no credible plan to shrink it, and a 2027 budget whose key savings the lower house has already scrapped 12. Curfews are in force in Paris and Lyon after riots and more than 2,000 arrests, with protests called again for Saturday 18. The presidential election, in two rounds on April 18 and May 2, 2027, is one polls suggest the far right, fronted by Marine Le Pen, could win 18.
Either the spread or the grade is wrong
The gap between the grade and the spread is the trade. Either 174 basis points is too wide for a country S&P grades A+ and Moody's is expected to match at A1, in which case French bonds against German Bunds, and French bank shares, are the short into the agencies' reviews; or the market has already priced France below A, and the agencies' A grades are the trade.
Mike Bell of RBC BlueBay Asset Management sets the cliff below: if Moody's, S&P and Fitch all cut France to BBB, funds with rating limits become forced sellers of the bonds, and "that's where it could really start to get more ugly" 1.
Next readings: Saturday's protests, then the ECB on October 29 with December rate rises already priced 13. Moody's decides at 2000 GMT tonight 1.
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