Bond investors are demanding a higher yield to hold French bonds than lower-rated Spanish debt for the first time since 2007, as investors question the government’s ability to plug a hole in public finances.
The yield on 10-year French bonds traded at 2.97% on Thursday, slightly above their Spanish equivalents. The rate is already higher than that of Portugal, and is the closest it’s been in over a decade to similar-dated yields of Italy and Greece, as appetite for one of Europe’s safest assets wanes amid months of political turmoil.