Riddell: Why I would not touch French or EFSF bonds

EURO BONDS

Mike Riddell, manager of the £71m M&G Internatinal Sovereign Bond fund, warns on French bonds - and the European Financial Stability Facility which France partly funds - as the spread above German bunds jumps.

France has started wobbling again recently. French 10-year government bond yield spreads over Germany have blown out from just under 100 basis points at the beginning of December to 150 basis points today, although this is still a bit below the wides of 190bp in mid November. Maybe people have woken up to the likelihood of France losing its AAA-status, or the probability France is going to have to issue even more bonds in the next three years than heavily indebted Italy. What makes much less sense is French government bonds now yield more than EFSF bonds. Fitch pointed out the obvi...