French bond prices decline after unexpected S&P downgrade

Published connected 20/10/2025 - 12:09 GMT+2 •Updated 12:11

The value of French bonds dropped connected Monday greeting and yields roseate arsenic investors demanded a higher premium to clasp authorities debt. Ten-year enslaved yields totalled 3.388%, compared to Germany’s 2.593%

Despite nan enthusiasm that followed nan French government’s occurrence successful pushing done a fund past week, nan state received an unexpected downgrade from 1 of nan awesome in installments standing agencies connected Friday.

S&P Global Ratings judged nan indebtedness of Europe's 2nd biggest system riskier than before, owed to "elevated uncertainty connected nationalist finances”.

The agency downgraded nan state from "AA-" to "A+" pinch a unchangeable outlook.

The determination from S&P Global Ratings was anticipated, but nan timing was a surprise, arsenic nan agency had planned to merchandise verdicts astatine nan extremity of November.

S&P Global Ratings said successful a connection that it expected nan 2025 wide authorities fund shortage target of 5.4% of GDP to beryllium met. It besides forecasts slower than expected advancement connected budgetary consolidation successful nan coming years.

“We expect gross wide authorities indebtedness to scope 121% of GDP successful 2028, compared pinch 112% of GDP astatine nan extremity of past year,” nan group said.

French Minister of nan Economy Roland Lescure said that nan determination connected nan downgrade was “a telephone for clarity, responsibility, and seriousness,” successful an question and reply pinch Franceinfo connected Saturday. The curate besides called connected lawmakers to activity together to tackle nan pressing financial threat.

On 14 October, recently reappointed Prime Minister Sébastien Lecornu submitted a 2026 fund connection to nan National Assembly. The parliament has until 23 December to statement and amend nan legislation.

Lescure besides said: "It is really up to us, some nan authorities and Parliament, to person observers to proceed to reassure investors and standing agencies."

France’s in installments people was downgraded by Fitch Ratings successful September, pinch nan agency citing mounting governmental instability and uncertainty complete nationalist finances.

The US-based agency trim France’s standing from “AA-” to “A+”, besides informing that France’s indebtedness is group to support rising until astatine slightest 2027 without decisive action.