French Banks' Credit Risk Has Surged Above Major European Peers

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Developments take place in a context of strong pressure on French sovereign debt. The gap between the 10-year French bonds and the German Bunds exceeded 150 basis points, reaching unseen levels since the euro area debt crisis, while French sovereign CDS rose to about 87 basis points, the highest level since the beginning of 2013.

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The credit risk of French banks increased beyond that of their main European counterparts, but AT1 subordinated bank debts also suffered more overall from the rise in rates.