Franklin Templeton, LGIM, Vanguard underweight French debt
France expects budget deficit above 5 this year
DebttoGDP ratio could rise to over 130 in 2040 Morgan Stanley

April 19 Reuters Some of the world39;s biggest investors are staying away from France39;s government debt, feeling underpaid to take on exposure to its deteriorating public finances.

France39;s budget deficit came in well above target at 5.5 of economic output in 2023, rising from the year before in contrast to other major euro zone economies.

The government has already hiked its 2024 deficit target to 5.1 from 4.4. Deficit reduction plans lack credibility without further details to curb spending, France39;s public finance watchdog said on Wednesday.

None of this is likely to sound encouraging to credit ratings agencies, which begin reviewing the country next week.

Euro zone debt sustainability worries have typically centred on poorer Southern European states rather then the bloc39;s second largest economy and biggest government bond market with 2.46 trillion euros 2.62 trillion outstanding.

But unease around surging debt levels globally, including in the United States, is growing, with the IMF on Wednesday urging countries to rein in spending.

We39;re heavily underweight French bonds, said David Zahn, head of European fixed income at Franklin Templeton, which manages 1.4 trillion in assets. It39;s really the fiscal situation that concerns us.

France39;s finance ministry declined to comment…