Vanguard, managing $12tn in assets, warns France's creditworthiness is "degrading," driving up borrowing costs. Asset manager Ales Koutny told the FT that the upcoming presidential election could worsen the outlook if candidates refuse spending cuts. French 10-year yields surged from 3.2% to above 4.8%, the biggest G7 jump since the Iran war began.

The spread over German debt hit 1.1 percentage points, a 2012 high, making France cost 0.2 percentage points more to borrow than Italy. Prime Minister Sébastien Lecornu faces a budget battle risking government collapse. Far-left hopeful Jean-Luc Mélenchon's suggestion to cancel national debt held by the central bank fueled concerns over political will to rein in borrowing.

France was downgraded by Scope to A plus from AA minus, with Scope citing "continued deterioration in the fiscal outlook." French yields now trade above LVMH bonds, with Mizuho's Evelyne Gomez-Liechti noting France is "increasingly trading more like a lower-rated sovereign than an A-rated" issuer.