Hedge Funds Dominate Weekly Orders for French Bonds

The Banque de France cited European Central Bank survey data showing hedge funds submit over half of the orders placed each week with banks that distribute French government securities. The central bank’s June 26 financial stability report warned the investor base for sovereign debt is shifting to “less stable holders.”

There is no official tally of the total stock of French debt held by hedge funds. U.S. Securities and Exchange Commission filings show financial institutions based in the Cayman Islands held about $64 billion (€55 billion) of French bonds in June 2025, a position that rose nearly 30% over the previous six years.

France’s total public debt exceeds €3.5 trillion and the debt-to-GDP ratio is near 117%, placing the country among the highest in Western Europe. Cayman-based holdings therefore represent a small share of outstanding debt.

Hedge funds are active in secondary trading of sovereign bonds and often change positions quickly in response to price moves, volatility or shifts in fiscal expectations. That trading accounts for a large share of weekly orders even where absolute holdings remain limited.

The central bank noted larger borrowing needs and ongoing debates over public spending as factors that make demand and yields on French debt more sensitive to investor behaviour. Officials warned the changing mix of creditors could affect market functioning.

Market participants are monitoring secondary-market flows and dealer order books as France continues to finance sizable deficits and manage a high stock of debt.