Chart of the Month: November 2025

France’s surprise downgrade to A+, from AA-, underscores mounting fiscal strain and political fragmentation, with debt projected to reach 121% of GDP by 2028. The move sparked a sharp widening in OAT-Bund spreads, signalling heightened sovereign risk. Liquidity repercussions are were immediate: money market funds have cut French exposure, repo core collateral pools shed French names, and tenor limits tightened from six months to as low as one—reflecting investor concern over further downgrades given French banks’ significant role in liquidity management.