French Bond Risk Hits Euro-Crisis Levels

• European banks are in their best health in 30 years, supported by reasonable yield curves, benign credit conditions, and increased loan growth.
• France's bond risk premium has risen to euro-crisis levels (150bps over Germany), driven by fiscal consolidation pressures and strong entitlement spending.
• AI-related corporate bond issuance in Europe has tripled this year, absorbed well due to longer durations, with further growth expected next year.
• Project finance is increasingly shifting from traditional banks and bond markets to the private credit market in Europe.

Huw van Steenis from Apollo discusses the robust health of European banks, the rising bond risk premium in France, and the significant increase in AI-driven corporate bond issuance in Europe. Despite some economic fraying and stress from energy prices, the overall sentiment highlights resilience and problem-solving within the European financial landscape, with a notable shift towards private credit for project finance.