In the absence of a balanced budget, let us recall that France aims to reduce the public deficit below the 3% threshold by 2017.
Fortunately, the debt is being negotiated at very low interest rates. The first debt issuance carried out in 2016 by the Agence France Trésor was a success, with ten-year interest rates at their lowest since April 2015.
France will need to finance 187 billion euros of debt in 2016.
Despite France having lost its triple-A rating with all rating agencies, its debt remains highly sought after. Indeed, the first debt issuance managed to raise 9 billion euros at a rate of 0.86% (ten-year maturity).
French debt is attractive for several reasons: on one hand, it yields more than German debt (almost double, while still remaining below 1%) and on the other hand, it is very liquid.
A debt mainly held… by foreigners
For the entire debt, according to the AFT, 63% of the holders are foreigners. The Japanese are particularly keen on French debt, purchasing 4 billion euros of it in the second half of 2015. In Japan, French debt now represents more than half of the 200 billion euros of European bonds held by the country.
While the Japanese hold more than 100 billion euros of French debt, French insurers hold 18.80% of the total debt in circulation, ahead of the 9.40% held by banks.
