France’s snap parliamentary election has caused a small but not insignificant rise in political risk for insurers on several different fronts, which could feed into investment appetites of foreign investors putting money into France, as well as the French domestic market.
This is according to many commentators in the market who have listed possible repercussions from both a far-right and a far-left majority. “The risk for France is that the spread on its debt could continue to widen, with some French bonds already yielding more than lower-rated Portuguese paper,” said Allianz Global Investors (Allianz GI) in its paper on the possible outcomes of the election. “We see a risk of large institutional investors turning their back on France’s debt as their local interest rates become more attractive. This could have tectonic implications globally.”
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