Hedge funds become leading traders of French government bonds

According to a recent financial stability report, the investor base for French sovereign debt is increasingly composed of hedge funds, which now submit the majority of weekly sales requests. Historically, the country's bonds were primarily owned by public institutions, banks and insurers. The report, drawing on an ECB survey, highlights this shift toward less stable holders.

U.S. regulator data indicates that hedge funds based in the Cayman Islands held $64 billion of French bonds in June 2025, reflecting a rise of almost 30% over six years. Despite their growing trading dominance, these funds represent only a modest portion of France's overall debt, which exceeds €3.5 trillion. The Banque de France cautions that this changing ownership pattern could affect market stability.