It was expected. The deputies decided on Monday, September 8, to bring down the government of Prime Minister François Bayrou. The specter of a new political crisis therefore resurfaces. But will your savings be affected by this new earthquake? Not the CAC 40 – for the moment -, which has closed up (+0.78%), a few minutes from the vote of trust, and which was still displayed in the green this Tuesday September 9 at the opening of the markets (+0.3% at 10:30 am). As for the interest rate at 10 years of French debt, the famous OAT 10 years, it fell slightly to 3.49%, according to the agency France Trésor. Proof that the news was anticipated.
The absence of government, and budget, this fall, the concern of investors is nonetheless aroused. And in this case, the latter claim to receive higher interests to lend money to France, perceived as a less sure country to reimburse them. Exactly as an individual whose banks would doubt reimbursement capacities, and which would obtain a higher mortgage rate than the average.
French debt, engine of the yield of Euros funds
At first glance, therefore, the maintenance at a high level of the rate of French bonds at 10 years (oat 10 years) – which France issues to borrow – is rather a bad sign, since this rate “Reflects the credibility of the French state in the face of investors”, Summarizes Cyrille Chartier-Kastler, founder of the Facts & Figures cabinet. However, it could paradoxically enrich savers holding life insurance invested in euros funds. The yield of this safe part of your contract depends greatly on the rate of French debt. As the Good Value For Money site recalls, a “classic” euro fund is indeed composed of more than 75% of state bonds on average, and in particular these French obligations at 10 years.
So, “The key indicator of the yield of Euros funds is the evolution of the OAT rate at 10 years”, reveals Cyrille Chartier-Kastler. Because when the rate of these obligations increases, insurers – which subscribe to compose their euros fund – are more remunerated. And the OAT rate may well continue to climb in the coming months, according to Cyrille Chartier-Kastler: “Currently, the OAT rate is displayed around 3.50%, but I would not be surprised that it could rise to 4.20% this fall, especially if France’s note were to be degraded.” What the Fitch rating agency could do on Friday, September 12.
A 2025 return up for your life insurance?
Concretely, does this mean that you can expect a canon rate served by your life insurance in January, when the 2025 contracts of contracts be announced? It is not assured. Indeed, the rate distributed on the Euros fund does not identify the performance of the insurers’ portfolio. The latter freely set the performance of their risk -free support according to different criteria, for example according to the rate of their main competitor: booklet A. The remuneration of the latter having dropped to 1.7% on August 1, insurers will not have the obligation to serve a staggering rate for their savers to do better.
In addition, it should be remembered that a euro fund is made up of thousands of obligations that insurers keep for a long time (on average eight years). Also, a good part of them therefore still have in the portfolio of state obligations much less remunerated than today: between 2018 and 2022, French obligations were still issued at a rate of less than 1%, for example. Thus, even by massively subscribing to bonds at 3.50% or 4% this fall, this would not be enough to increase the yield of their entire euros. No outcoming yield of your contract to wait, therefore, but the fact that the French OAT has been regularly above the 3% mark in recent years should still lead insurers to serve an average rate in the line of 2024 and 2023.
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