I’m not *that* French

French government bonds got bodied by this week’s global sell-off, as France-specific fears spiked the already heady cocktail of alarms driving yields higher everywhere.

The OAT-Bund spread was knocked right off the pitch, to 113bp.

Unfortunate timing for French banks and companies, which were busy packing in all the funding they could before negotiations over next year’s national Budget begin in October — an event that has been glowing red on the risk events calendar all year. Too bad the risk came early.

Private sector issuers are still welcome in the market, though they are paying up a little over non-French names. But the louder political crisis gets — and it is sure to get very loud during next April’s presidential election — the more French borrowers will be emphasising to investors how much of their business activity is actually outside France.

In emerging markets, plunging US Treasury prices have left the illiquid secondary market stranded, with spreads much too narrow — and hence no use for planning or pricing new issues.

A freakier result of this year’s weird rates patterns has been the flowering of sterling floating rate notes. This ancient instrument has been gathering dust at the back of the toolshed for years, but was rediscovered by supranational issuers last year and in 2026 is positively glamorous.

Two supranationals that had never issued an FRN linked to Sonia and one that hasn’t for seven years have brought deals in the past week.