French bond sell-off widens gap with Germany to 2012 levels

French 10-year borrowing rates hit 4.96% on Tuesday, October 20, versus 3.43% for Germany, marking the widest spread since January 2012 during the eurozone sovereign debt crisis. This follows a weekend of riots and reflects growing market distrust amid political and fiscal tensions. Investors are demanding higher risk premiums for French debt, with the spread reaching 153 basis points. France's sovereign debt nears 120% of GDP, with record issuance of 340 billion euros planned and interest costs projected at 90 billion euros for 2027. BlackRock strategists describe a "massive sale" of French bonds, though some analysts like Neuberger's Patrick Barbe argue the widening spread stems more from a lack of buyers than a seller rush. Barbe suggests the market sanction may be excessive, noting his firm has shifted to a neutral position.