French Debt Yields Matching Italy? Not Such a Crazy Notion
Investors have halved the discount for lending to Paris rather than Rome. That trend may well continue.
Bond investors charge the leader on the right less to borrow than the leader on the left. For now...
Photographer: Ludovic Marin/AFP/Getty Images
“It’s not impossible that one day, and it might seem crazy what I’m saying, the French yield will be the equivalent of the Italian yield,” Nicolas Forest, the chief investment officer of Luxembourg-based €145 billion ($156 billion) asset manager Candriam, said in an interview with Bloomberg News this week. Given the deterioration in French finances and the febrile political climate, the notion is far from crazy.
President Emmanuel Macron's decision to call snap parliamentary elections has brutally exposed the parlous state of the nation's economy. France, along with Italy and five other smaller euro nations, were cited Wednesday by the European Commission to potentially be placed into Excessive Deficit Procedure measures. But Paris faces a tougher immediate economic future than Rome.