As yield rates for France’s sovereign debt climbs to levels most analysts feel to be unsustainable, the country’s triple A credit rating  is firmly in the sights of the major ratings agencies. 10-year French government bonds rose to 3.5 percent as investors demanded an extra premium for the greater risk now associated with French debt.
The yield spread  between 10-year French bonds and the benchmark German rate rose to 158 basis points.
In mid-day trading today, the extra yield demanded by investors for 10-year bonds rose to 158 basis points over the benchmark German rate. With yield spreads also widening in other triple-A economies including Austria and the Netherlands, it is evident that the debt crisis is penetrating the very core of the Eurozone.
Of the top-tier countries, France has the greatest debt burden with a debt-to-GDP ratio of 85 percent. It is also estimated that French banks have the greatest overall exposure to the Eurozone’s most indebted nations with just over $900 billion according to the Bank for International Settlements.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.