Greek sovereign bonds have reached parity with French bonds, reflecting Greece’s fiscal reforms and France’s mounting economic pressures. Greek 10-year bond yields, once 40 percentage points higher than France’s, now match them at under 3%. This marks a dramatic recovery from Greece’s near-default during the eurozone debt crisis.
Greece’s Fiscal Renaissance
Greece’s bond performance highlights fiscal discipline and robust reforms. Analysts credit a primary budget surplus of 2.4% of GDP in 2023. Bank of America notes Greece’s economic resilience, with strong private consumption and investment driving growth.
Most of Greece’s public debt carries fixed, low-interest terms and long maturities, insulating it from rising eurozone rates. Greek banking has also benefited, with Buy ratings for major banks like Eurobank and Alpha Bank.
Despite tightening spreads against German Bunds, risks remain. Geopolitical tensions or market volatility could limit further gains for Greece’s bonds.
France’s Mounting Fiscal and Political Struggles
In contrast, French bonds face increasing yields, reflecting fiscal challenges and political uncertainty. French 10-year bond yields rose to 2.945% in late November, with an 81.7-basis-point premium over German Bunds.
Prime Minister Michel Barnier’s €60 billion spending cuts face fierce opposition, risking fiscal paralysis. Goldman Sachs predicts France’s debt-to-GDP ratio could reach 118% by 2027 due to slow reform progress.
Structural issues, including ageing demographics and stalling productivity, further complicate France’s fiscal outlook. Greece’s public debt is steadily declining, while France’s debt continues to rise, highlighting contrasting fiscal trajectories.