France: When Companies Borrow Cheaper Than the State

In September and October 2026 , France’s borrowing costs rose sharply, attracting significant media attention. The French 10-year yield moved above 5% , its highest level since 2002. The spread between the French 10-year government bond (OAT) and the German Bund also reached 174 basis points on 22 October. This is the highest level since 2011 , the year of the E urozone sovereign debt crisis.

However, the market is now making a sharp distinction between French government bonds and French corporate bonds . In fact, French investment -grade companies can now borrow slightly more cheaply than the French government on Fixed Income markets (8 basis points less on average as of 23 October 2026 ). In sharp contrast to today’s trend, previous periods of market stress (in 2011 , 2020 and 2022 ) saw French corporate spreads widen relative to French government bonds.

Our analysis

Several factors may explain this divergence. First , it shows that concerns over France’s public finances have not spilled over to the private sector . Investors remain reassured by the underlying strength of French companies , even though inflation pressures have weakened the economic outlook.

It also confirms that the OAT is no longer a safe -haven asset : it now carries a higher risk premium than private borrowers (excluding the High Yield segment) . Finally, it may show that the market expects France’s credit rating to be cut in the future. The State’s borrowing cost is now equal to that of BBB - companies , while France is still rated A+ by Fitch and S&P, and Aa3 (equivalent to AA-) by Moody’s, which chose to leave this rating unchanged on 23 October.