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The premium investors are demanding to hold French over German 10-year debt has been given a fresh kick higher in the last few minutes after Francois Fillon said he would not take himself out of the running to be the country’s next president.
France’s 10-year yield gap with Germany – a measure of perceived riskiness of its debt – is now at its highest level since November 2012, swelling to 76 basis points and the widest margin since the immediate aftermath of the eurozone’s debt crisis.
The spread had been hovering around 72 basis points for most of the day, but Mr Fillon’s claims he has not acted inappropriately over taxpayer funds used to pay his family members has accelerated the sell-off in French debt.
The right-wing former prime minister had been favourite for the presidency before being hit by the scandal two weeks ago.
“It was an error and I am sorry and I apologise to the people of France. But in this case, let’s reform the system. Let’s begin the debate on this”, Mr Fillon told journalists in Paris on Monday.
France’s 10-year bond yield, a nominal measure of the government’s borrowing costs, is now at its highest since August 2015 at 1.14 per cent – under-performing wider eurozone debt today by climbing 7 basis points (yields rise when a bond’s price falls).
The eurozone’s second largest economy will be electing its president in a two round vote in late April and early May, where the far-right Marine Le Pen – who wants to pull the country out of the eurozone – is expected to qualify but lose the second round vote to centrist Emmanuel Macron.