After a sharp selloff in sovereign debt, the amount of French corporate bonds offering lower yields than the country's government debt has surged to nearly 215 billion euros ($241 billion), a roughly 17-fold increase since the start of 2026.

According to data compiled by Bloomberg News, about 38% of France's high-grade corporate bonds yielded less than government bonds of comparable maturity as of Wednesday. At the beginning of the year, that figure stood at just 12 billion euros.

This dynamic, which upends traditional market hierarchy, is not entirely unprecedented, but it has intensified rapidly amid concerns that deficit targets may prove unachievable, a deadlock over the new budget, and an approaching presidential election that could set France on a radically different course.

As investor confidence in French government debt weakens, corporate bonds have instead become one of the safest havens, particularly those issued by companies with substantial overseas operations such as L'Oreal and oil and gas giant Total.

"France's sovereign credit profile is becoming increasingly disconnected from corporate credit profiles," said Elisa Belgacem, senior credit strategist at Generali Investments. Companies and banks "continue to enjoy strong investor demand, underscoring confidence in issuers' fundamentals and the appeal of their all-in yields."