French 5-year CDS hits highest level since April 2025 as sovereign debt fears mount

France’s 5-year credit default swap spreads have climbed above 45 basis points, reaching levels not seen since the panic-soaked days of March 2020. CDS spreads are essentially the price of insuring against a government defaulting on its debt. When they rise, it means the market thinks the risk of not getting paid back just went up. The numbers painting the picture The surge didn’t happen overnight. On September 18, French 5-year CDS hit 41.5 basis points, already the highest reading since April 2025. In the days that followed, spreads continued climbing, with trading between September 19 and 21 showing the instrument fluctuating between 39.96 and 43.40 basis points before ultimately pushing past the 45 bps threshold. To put the velocity in context: weekly gains exceeded 14%, while monthly gains topped 20%. Meanwhile, the spread between French 10-year government bonds (OATs) and German Bunds widened to 104 basis points. That’s the first time the gap has breached the 100 bps level since the eurozone debt crisis of 2012. The implied default probability baked into current CDS levels sits around 0.67%, assuming a 40% recovery rate. Why the fiscal math is spooking markets France’s projec...