France’s risk premium exceeds that of Spain for the first time since 2008

According to LSEG data, the surprise It occurred this Tuesday morning. However, shortly after, The yield on the 10-year French bond stood at 2.969% in the secondary market. The percentage was slightly lower at 2.981% offered by the paper national also with a life of a decade.

Spanish bonds have traded at higher yields than French bonds since the financial crisissince Spain is traditionally considered a higher risk issuer. But that gap has closed briefly this Tuesday as a result of the worse economic outlook and greater political uncertainty affecting France.

Proof of this is that the new French Prime Minister, Michel Barnier, recognized on Sunday that The country’s fiscal situation is “very serious,” with a public debt of more than three billion euros. As most of the French debt is issued in international markets, he highlighted that “We must maintain the credibility of France.”

In this sense, he ruled out increasing taxes on all French people, but warned that people with higher assets They will participate “in the national effort that will have to be made.” In this effort “some very large companies can also contribute, multinationals that are working well.

“Political uncertainty, difficult fiscal prospects and the growing divergence in financing conditions between France and other eurozone countries underline the importance of political stability and efforts to carry out reforms to reduce the deficit,” say Scope Rating analysts.

“The fact that France belongs to the G7, its capacity for economic recovery, its weight in European governance and its solid institutional strength have so far mitigated concern about the successive budget deficits of the country’s governments“add the same experts.

Political uncertainty

However, despite the economic recovery after the pandemic, the increase in political uncertainty since the early elections in June has been coupled with the deterioration of budgetary prospects.

“The fact that parliament is deeply divided This decision does not clarify whether a stable government can be formed that has sufficient support to materially reduce the budget deficit and enact the important supply-side reforms necessary to reinforce the growth potential of the economy,” they indicate from the rating agency.

In this scenario, Barnier’s new government must present the budget plan for 2025. “The public deficit in 2023 amounted to 5.5% of GDP and the Treasury has already indicated that France will end this year with a deficit of 5.6%, far from the 3% target of the European Union. France has been under the excessive deficit procedure since last July” from Brussels, Bankinter analysts recall.

The outgoing Government had marked the goal of reducing the deficit to 3% of GDP in 2027. However, few considered this trajectory credible, starting with the governor of the Bank of France, François Villeroy de Gallois, who was betting on a longer term.

Antes de que la Comisión Europea incluyese a Francia en el procedimiento de déficit excesivo, a finales del pasado mayo, la agencia de calificación crediticia S&P rebajó el rating de Francia hasta AA-. Ya a finales de 2022 había situado su perspectiva en negativa.

La nota que da Fitch a la deuda francesa también es de AA-, mientras que Moody’s aún la sigue calificando como Aa2, es decir, un peldaño por encima. La nota de España es peor. Tanto Fitch como S&P califican la deuda española como A, dos escalones por debajo de la francesa.

Estrechamiento

El diferencial de los bonos franceses con los de los países periféricos de la zona del euro empezó a estrecharse antes de las elecciones legislativas anticipadas de este verano. La rentabilidad del bono de Francia a 10 años comenzó el ejercicio en el 2,477%. Llegó al 3,373% el 2 de julio, entre la primera y la segunda vuelta de los comicios. En la actualidad se coloca en el mencionado 2,969%.

Para Scope Rating, “esta convergencia refleja tanto las difíciles perspectivas crediticias de Francia como el fortalecimiento de los fundamentales crediticios de países como Grecia, Portugal y España, que han reducido significativamente su deuda pública, incluso mediante la consecución de saldos primarios o superávits”.

Como resultado, el diferencial de Francia con la periferia se ha reducido hasta incluso llegar a invertirse respecto a algunos países. El último caso ha sido el de España.