Investors fear that the French elections could affect the economy in a same way as the US elections did. The main reason is the rise of the populist French politician Marine Le Pen, who might take home the win of the French election.
Le Pen’s campaign focusses on the idea that leaving the EU would enable France to regain its independence and boost the French economy.
Investors are selling French government bonds, which causes yields to increase by almost 50% since the start of this year. This might suggest investors see French debt as substantially riskier when compared to for instance Germany.
S&P and Moody's have warned that should Le Pen win and decide to ditch the euro, repaying the €2.1 trillion ($2.2 trillion) debt in a new French currency, that would be the equivalent of a default. Such a default would be the biggest in history, surpassing Greece’s default in 2012.
For more on this story, follow the link