Tyrian Trade

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.

Japanese Asset Manager Reportedly Exits French Bonds as Sovereign Risk Rises

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