France’s five-year credit-default swap spreads climbed above 45 basis points, reaching levels not seen since March 2020 as markets reassessed the country’s sovereign credit risk. The instrument’s implied default probability was about 0.67%, assuming a 40% recovery rate, while weekly gains exceeded 14% and monthly gains topped 20%. France’s 10-year OAT-Bund spread widened to 104 basis points, its first breach of 100 basis points since the 2012 euro zone debt crisis. The move came as France faces a projected 2026 budget deficit of approximately 5.4% of GDP, above the European Union’s 3% ceiling, and debt equal to roughly 118% of GDP. BNP Paribas fell 3.6%, while Credit Agricole and Societe Generale each declined 2.5%. Ratings downgrades, higher debt-servicing costs, political uncertainty and limited progress on fiscal reforms continue to weigh on French assets, while use of the European Central Bank’s Transmission Protection Instrument could be politically difficult because the market stress reflects deteriorating fundamentals rather than clear dysfunction.