Lagarde calls France's 120% debt load serious with no path lower
The ECB president's comments to La Croix land as France's borrowing premium over Germany widens further in Wednesday trading
Published
European Central Bank President Christine Lagarde tells La Croix newspaper that France's debt situation is serious, with debt at 120% of GDP and no path to bringing it down.
The remarks come as France's 10-year yield premium over Germany is up 5 basis points on the day, at 124 basis points.
The French spread has been widening since mid-September, when Scope Ratings downgraded France to A+ on September 18. France's 10-year yield is at its highest level since 2008.
Lagarde's characterization carries weight beyond routine ECB commentary because it comes from the institution meant to backstop euro-area stability, rather than from a rating agency or from French officials who have political reason to soften the picture. Her framing lends credibility to further widening in France's spread and, if investors extend the read-through to sovereign debt sustainability more broadly, could add pressure to long-dated Treasurys as well.