Last week a story crossed the market that sounds louder than it is. Bloomberg reported that Goldman Sachs and Deutsche Bank now offer clients "baskets" of French bonds - including the riskiest AT1 bank debt - to trade or hedge the 2027 presidential election. Goldman declined to comment; Deutsche Bank says they are available to clients, not built for this news cycle.
Fig. 1. 10-year government bond yields for France, Italy and Germany, 25 September 2026. Source: Trading Economics.
A tidy narrative grew from that: "Goldman is betting on a French debt crash and expects a Greek-style crisis by 2027." That is not the bank's view. Goldman says the opposite: it does not expect a systemic crisis, citing European institutional backstops and the Rassemblement National's shift away from its anti-euro line. Its stress case, cited by Investing.com on 7 September, puts the OAT-Bund spread near 70 basis points, with 100 a reasonable stress level.
The market has run past even that. Reuters reported that on 18 September the spread topped 100 basis points for the first time since 2012, hitting 104. By 25 September, per Trading Economics, 10-year OATs had risen to 4.72%, the highest since July 2008, while Bunds sat at 3.60% - a gap of about 112 basis points. France now borrows above Italy: the eurozone's once risk-free debt market no longer is.
Fig. 2. French government debt to GDP, %, and Greece's 2009 level. Data: Eurostat/INSEE, IMF, Goldman Sachs.
Fig. 1. 10-year government bond yields for France, Italy and Germany, 25 September 2026. Source: Trading Economics.
A tidy narrative grew from that: "Goldman is betting on a French debt crash and expects a Greek-style crisis by 2027." That is not the bank's view. Goldman says the opposite: it does not expect a systemic crisis, citing European institutional backstops and the Rassemblement National's shift away from its anti-euro line. Its stress case, cited by Investing.com on 7 September, puts the OAT-Bund spread near 70 basis points, with 100 a reasonable stress level.
The market has run past even that. Reuters reported that on 18 September the spread topped 100 basis points for the first time since 2012, hitting 104. By 25 September, per Trading Economics, 10-year OATs had risen to 4.72%, the highest since July 2008, while Bunds sat at 3.60% - a gap of about 112 basis points. France now borrows above Italy: the eurozone's once risk-free debt market no longer is.
Fig. 2. French government debt to GDP, %, and Greece's 2009 level. Data: Eurostat/INSEE, IMF, Goldman Sachs.
What Goldman itself says
In a 24 September report the bank lifted its French debt forecast to 125% of GDP by the start of the next decade, sees deficits of 5.4% in 2026 and 5.3% in 2027, and puts the odds that French debt overtakes Italy's at 12%. Stabilising the ratio needs a primary surplus near 1% of GDP - something France has almost never run since 1980. Not a crash forecast, but arithmetic in which the cushion thins.- The baskets cut both ways and can hedge a portfolio against political risk.
- The strain is in the data: a 2012-level spread, 2008-level yields, OATs above Italian BTPs.
- The irony: in 2001 Goldman helped Greece mask its deficit with swaps; today it arms clients against France - while predicting no collapse.
⚠ IMPORTANT
Verdict: Goldman really is selling a bet on French risk, but "a Greek-style crisis by 2027" is a commentator's reading, not its forecast. The danger is not the trade but that the market now prices OATs below Italian paper.