France’s Dominance in Euro Credit Leaves Market at Vote’s Mercy

President Emmanuel Macron’s surprise election call last week has highlighted France’s prominence in European credit markets.

Whether it’s blue-chip, junk bonds or collateralized loan obligations, euro-denominated credit markets have been battered after the French president’s June 9 decision threw the country into political chaos. IHS Markit’s crossover index of credit default swaps, a key indicator of European credit risk, had its biggest spike in well over a year last week, rising 42 basis points.

The driver of this rout, in large part, is France. The nation’s firms account for the biggest component in the main categories of the region’s debt, ...