Faced with the prospect of a far-right or a far-left president, the bond market doesn’t see France curbing its rapidly growing pile of debt anytime soon and has started weighing the possibility that the eurozone’s second largest economy could default.

That’s according to Thierry Wizman, global FX and rates strategist at Macquarie Group. In a note Thursday, he said the cost of insurance against a French default is now the highest among the major EU countries and the U.K.

Early Friday, the signals sharpened further as France’s five-year sovereign credit default swap rose to 81 basis points. At the same time, its 10-year bond yields jumped to 4.989%, the highest since 2002, and the premium over equivalent German yields widened to 152 basis points, the most since the eurozone debt crisis in 2011.

Wizman warned: “The signal from France CDS pricing is that the OAT/Bund spread widening is due to higher sovereign default risk in France.”

Those metrics later came off their highs, but France’s fundamentals remain troubling, with anemic GDP growth, a budget deficit estimated at about 5.4% of GDP, and rising debt-service costs as yields jump.

Meanwhile, France’s debt-to-GDP ratio is expected to climb to 122% next year from 119% this year, and the government’s latest plan failed to halt the surge in bond yields as investors doubted its credibility.

“But our instinct is to also read the suddenly widening OAT/Bund yield spread as a ‘guilty’ verdict on the recent direction of France’s presidential politics,” Wizman wrote. “The problem in particular is political polarization, which has arisen—as it has across Europe—mainly over the immigration issue, rather than fiscal issues. But in France, neither the populist Left nor the populist Right are fiscal hawks.”

Indeed, far-left presidential candidate Jean-Luc Mélenchon is campaigning on a plan to have the central bank simply cancel its holdings of French debt.

And far-right leader Marine Le Pen, who is leading in the polls for the presidential race, has proposed tax cuts and vowed to bring down France’s retirement age to as low as 60, despite the already generous pension system eating up an ever bigger slice of the budget.

A runoff between the two candidates is expected next year, and Le Pen’s National Rally (RN) party is seen as the likely winner.

“As such, an outright default may be a low-probability event, but an RN-led presidency, with an adverse influence on the 2028 budget and credit-risk perceptions is a high-probability event, near 50%,” Wizman added.

He also pointed out that the presidential campaigns have barely begun, meaning the rhetoric around France’s debt, a potential default, and budgetary politics is set to heat up and further damage the perception of the government’s creditworthiness.

To be sure, France isn’t alone in facing high debt and market pressure on its bonds. The U.S. debt-to-GDP ratio is now 100%, and Japan’s is well above 200%.

But America’s GDP growth is much more robust, and Japan enjoys a large pool of built-in demand for its debt from domestic investors. By contrast France’s economy is projected to grow just 0.5% this year, and the government plans to issue over $380 billion in medium- and long-term debt next year.

Ales Koutny, head of international rates at Vanguard, told the Financial Times that demand for debt in markets that become the center of geopolitical issues “can disappear in times of crisis,” describing France as “long-term degrading credit.”

Similarly, Scope Ratings also flagged political risks when it cut France’s credit score to A+ from AA- last month, bringing it on par with Fitch and S&P Global Ratings.

In particular, the ratings firm cited the government’s difficulties in meeting self-imposed deficit targets, adding that the sharp rise in bond yields this year will further increase borrowing costs and make any debt solution even more painful.

“Scope expects political fragmentation to remain elevated beyond the 2027 presidential election, complicating the substantial fiscal consolidation required to stabilize public debt and increasing the risk that measures are diluted, delayed, or only partially implemented over coming years,” it warned. “This weakens Scope’s confidence in France’s ability to halt, let alone reverse, the deterioration of its public finances over the medium term.”