Japanese Asset Manager Reportedly Exits French Bonds as Sovereign Risk Rises

Sumitomo Mitsui DS has reportedly exited its entire position in French government bonds, rotating into German Bunds and short-term Japanese debt.
France's 10-year yield spread over Germany has reportedly widened beyond 140 basis points, while five-year CDS has climbed to around 81 basis points, signaling a sharp increase in perceived sovereign credit risk.
Japanese investors still hold roughly ¥25 trillion of French debt. If more capital follows the rotation back toward Japan, France could face additional pressure to offer higher yields at a time when fiscal concerns are already weighing on its bond market. A broader repatriation of Japanese capital could also challenge carry trades that previously helped finance higher-yielding assets overseas.