Back to school barely launched, France is already a bad student. Friday, September 12, the Fitch ratings rating agency lowered a notch of the French debt note. The tricolor signature thus went from “AA-” (with negative perspective) to “A+”, accompanied by a stable perspective. But what will be the concrete consequences of this degradation? As of now, the State should have more difficulty borrowing money to finance itself. More specifically, it will especially cost him more.
For the time being, France borrows for example from a rate of 3.45% at 10 years: it is the interest rate it pays to its creditors who lend it to this deadline. Between Friday – the day of the degradation of the note – and this Tuesday, September 16, this rate did not flambé. A sign that the lowering of France’s note was already anticipated by the financial markets. However, it is not impossible that the rate of French bonds continues to climb in the coming months: “If the markets are worried, we could exceed 4%, or even reach 5%”predicts Alexandre Baradez, manager market analysis at IG France.
You have undoubtedly invested in French debt with your life insurance
However, this increase in the borrowing rate of France is not without consequences for your savings. And a priori, it is rather good news: the higher the rate of an obligation (what is called the “coupon”), the more important the issuer pays. And that is good, since if you have life insurance, there is a good chance that it will be partly invested in French state bonds. The guaranteed part of this savings product – the fund in euros – is indeed composed of more than 75% of state bonds on average, according to the Good Value For Money site. And among these so -called “sovereign” obligations, French obligations are omnipresent.
For example, in the Euros Fund for the French Savings and Retirement Association (AFER), which has more than 760,000 members, French obligations are ultra-majority (21.1% of state bondsagainst 1.1% of American bonds, 0.7% Italian bonds, 0.2% Japanese bonds, for example). Does this mean that the yield of your Euros fund will flambé, if these French obligations, in number, come to remunerate more in the coming months?
It is not said. Indeed, the rate distributed on euros funds does not always reflect the performance of the securities in which insurers invest. The latter freely set the yield of this guaranteed fund according to different criteria (competing savings rate, including the booklet A, available reserves, etc.) In addition, it should be remembered that a euro fund is made up of thousands of obligations that insurers keep on average eight years. Also, a good part of them therefore still have in the portfolio of state obligations much less remunerated than today, which dilute the paid yield. Thus, the degradation of the French note should not have major impact on the rate distributed by your life insurance in early 2026. According to the first estimates, the average rate should be around 2.50%, in line with the yields served in 2024 and 2023.
