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Greek sovereign bonds have achieved a historic milestone by matching the yields of French bonds, reflecting Greece’s fiscal reforms. This marks a significant turnaround from the eurozone debt crisis when Greek 10-year bonds yielded 40 percentage points more than France’s.

During the crisis, Greece faced default risks, austerity measures, and debts exceeding 175% of GDP. Twelve years later, Greece’s fiscal discipline and economic reforms have drastically improved its bond market.

As of late November, Greece’s 10-year bonds yielded below 3%, aligning with France’s OAT bonds. Analysts credit Greece’s consistent fiscal overperformance and resilient economic growth for this achievement.

Greece’s Resurgence vs. France’s Struggles

Greece’s primary budget surplus, expected to hit 2.4% of GDP this year, highlights its fiscal strength. Analysts also attribute Greece’s resilience to its public debt’s fixed, low-interest terms with long maturities.

The Greek banking sector has benefited from this revival, with positive outlooks on major banks like Eurobank and Alpha Bank. Tightening spreads between Greek bonds and German Bunds demonstrate investor confidence, though geopolitical risks remain.

Meanwhile, France faces rising bond yields due to fiscal deficits and political uncertainty. French 10-year OATs now yield 2.945%, reflecting challenges in reducing the budget deficit from 6.1% to the 5% target.

France’s political instability, with public backlash against proposed spending cuts and potential elections, complicates fiscal reforms. Analysts warn of rising public debt, projected to reach 118% of GDP by 2027, limiting France’s fiscal flexibility.

This divergence underscores Greece’s emergence as a dynamic economy, while France grapples with structural challenges like ageing demographics and high energy costs. Greece’s economic growth, forecast at 2.3% by 2025, contrasts sharply with France’s expected slowdown to 0.8%. The contrasting trajectories highlight deeper shifts in fiscal discipline and economic resilience.