France's Growing Sovereign Debt Vulnerability Raises Concerns Over ECB Support

France is facing increasing vulnerability to a potential debt crisis, with over 60% of its sovereign debt held by foreign investors, making these investors more prone to flight. The spread between French and German bond yields, a key indicator of risk, has widened significantly. While the European Central Bank (ECB) has tools like Outright Monetary Transactions (OMT) and the Transmission Protection Instrument (TPI) to support Eurozone members, their deployment for a core country like France due to political risk would be highly controversial and has never been tested. Analysts suggest that even a small reduction in demand from marginal buyers could exert upward pressure on French bond yields.