Business · Markets · 1 hr ago
French Government Bond Yields Top 5%, Exceeding Some Corporate Rates
France’s long-term government borrowing costs have risen above 5%, up from about 4% in August.
The rise is linked to concerns about the government’s finances.
As a result, some financially strong companies can borrow for less than the French government.
This reverses the usual pattern, in which government bonds generally offer lower yields than corporate bonds.
An analysis found that yields on French government bonds due in seven to 10 years fell below those on investment-grade corporate bonds.
The shift shows that investors are demanding more return to lend to France than to some highly rated businesses.
The account gives no forecast or next step.
French government long-term borrowing costs have risen above 5%, exceeding rates for some highly rated companies.
The rate was about 4% in August, according to the Financial Times as cited by Hankyung.
An analysis found that yields on seven- to 10-year French government bonds fell below those on investment-grade corporate bonds.
The article attributes the rise in government borrowing costs to concerns about France’s public finances.
Some companies with relatively sound finances can therefore borrow long term at lower rates than the French government.
- Who
- The French government and some highly rated companies.
- What
- French long-term government borrowing costs rose above 5%, exceeding rates for some investment-grade corporate borrowers.
- When
- The report said the government rate was above 5% recently, up from about 4% in August.
- Where
- France.
- Why
- Concerns about the government’s public finances pushed bond yields higher, while some companies maintained relatively sound finances.
This story does not have two clearly opposing sides.
France’s long-term government borrowing rate was about 4%.
The rate rose above 5%, and the yield difference between seven- to 10-year French government bonds and investment-grade corporate bonds turned negative.
- French government borrowing rate
- Above 5% recently
- Rate in August
- About 4%
- Bond maturity range
- 7–10 years
- Corporate bond rating
- Investment grade
- Analysis source
- Richard Woolner of M&G