The CAC 40 dropped 1.11% on Monday October 20 and the 10-year OAT closed at 4.93%, widening the spread with the German Bund to 147 basis points, close to the 2012 record. France is now borrowing 35 to 40 basis points more than Italy on 10-year debt, as the Italian BTP settled at 4.55%. French debt stands at 3.595 trillion euros, or 119% of GDP as of end-June, and the Agence France Trésor plans to issue 340 billion euros in 2027, a record. Moody’s will publish its review of France’s rating (currently Aa3, negative outlook) on Friday October 23 after the close of European markets, with three possible outcomes including a downgrade to A1. The vote on 2027 budget revenues has been delayed by one week due to lack of a parliamentary majority, with the deficit targeted at 5.0% of GDP next year.
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