Lescure says France needs no bailout amid bond turmoil

French borrowing costs are still close to their highest levels in more than two decades. At the same time, European and international officials are publicly rejecting talk of a new eurozone debt crisis. Their message to Paris is that it has to fix the problem itself by passing its 2027 budget. France's 10-year yield has come close to 5%, a level last seen in 2002. Its spread over German Bunds is near a record of about 140 basis points. In early October the gap widened to around 147 basis points, the widest since 2012.tradingeconomics.com+2

Bangkok's message: pass the budget

At the IMF and World Bank meetings in Bangkok, EU Economic Commissioner Valdis Dombrovskis said he saw no signs of a new sovereign debt crisis. He added that "it's important that this budget is adopted in due time to provide a signal of clarity and stability". IMF chief Kristalina Georgieva said it would "take time" before French debt falls to levels that give investors "full confidence".modernghana.com+1

Bank of France Governor Emmanuel Moulin put the rise in yields down to political uncertainty over whether a budget meeting the 5% deficit target will pass. "To reassure markets, it is important that a budget is voted," he told CNBC. He also urged political leaders to "shoulder their responsibilities". The draft budget aims to cut the deficit to 5% of GDP next year from an expected 5.4% this year. Campaigning ahead of the spring 2027 presidential election has put its passage in doubt.rmb.reuters.com+2

No rescue from Frankfurt

ECB President Christine Lagarde spoke on Wednesday, October 14. She said "the primary and first solution lies at home in France," which cooled speculation that the ECB might use its Transmission Protection Instrument. Former ECB chief Mario Draghi said on Thursday in New Delhi that "the bar is high" for intervention, pointing to today's high inflation. Because France's fiscal policy is off the path agreed with the EU, it would not currently qualify for ECB help anyway.reuters.com+2

Paris insists it can cope

Finance Minister Roland Lescure told CNN on Thursday that France does not need a bailout and can get its fiscal house in order. Earlier this week he called the higher rates "an alarm signal" but said France still has "no trouble issuing debt". Bloomberg reported that France's repo funding market shows no signs of stress so far. It warned that conditions could still get much worse if cracks appear.cnn.com+2

France plans to sell a record €340 billion of bonds in 2027. That leaves Paris needing investors' confidence while it tries to get a budget through a parliament where it has no majority.centraloregondaily.com