The bond market has begun pricing in the possibility that France—the eurozone’s second-largest economy and home to one of the currency bloc’s largest government bond markets—could default on its debt, as investors lose confidence that a country facing the prospect of a far-right or far-left president will rein in its rapidly growing pile of borrowing.

That is the assessment of Thierry Wizman, global FX and rates strategist at Macarie Group, who said in a note on Thursday that the cost of insuring against a French default is now the highest among the major EU countries and the U.K.

The signals sharpened early Friday, when France’s five-year sovereign credit default swap rose to 81 basis points. Credit default swaps work like insurance against a borrower failing to repay, so a rising price signals mounting perceived default risk—81 basis points translates to roughly $81,000 a year to insure $10 million of French government debt. At the same time, the country’s 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, when fears over sovereign repayment roiled the currency bloc. French government bonds, known as OATs, are measured against German bunds, long treated as the eurozone’s benchmark; the gap between the two shows how much extra compensation investors demand to hold French debt rather than Germany’s.

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

Those metrics later came off their highs, but France’s fundamentals remain troubling: GDP growth is anemic, the budget deficit is estimated at about 5.4% of GDP—well above the European Union’s 3% ceiling for member states—and debt-service costs are climbing as yields jump. The debt-to-GDP ratio is expected to rise to 122% next year from 119% this year, and the government’s latest fiscal plan failed to halt the surge in bond yields, with investors questioning its credibility.

A ‘guilty’ verdict on French politics

Wizman argued that the market moves amount to a political judgment as well. “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,” he 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.”

Far-left presidential candidate Jean-Luc Mélenchon, for one, is campaigning on a plan to have the central bank simply cancel its holdings of French debt. Far-right leader Marine Le Pen, who is leading the polls in the presidential race, has proposed tax cuts and vowed to bring France’s retirement age down to as low as 60—despite an already generous pension system that is consuming 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 noted that the presidential campaigns have barely begun, meaning the rhetoric around France’s debt, a potential default, and budgetary politics is set to intensify—further damaging perceptions of the government’s creditworthiness.

How France compares with its peers

France is not alone in carrying high debt and facing bond-market pressure. The U.S. debt-to-GDP ratio now stands at 100%, and Japan’s is well above 200%. But America’s GDP growth is far more robust, and Japan benefits from a large pool of built-in domestic demand for its debt—a structural cushion that leaves its borrowing costs less exposed to global investor sentiment. France’s economy, by contrast, is projected to grow just 0.5% this year, and the government plans to issue more than $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 a “long-term degrading credit.”

Downgrade adds to the pressure

Political risk was also flagged by Scope Ratings, which last month cut France’s credit rating to A+ from AA-, bringing it on par with Fitch and S&P Global Ratings—grades that measure a government’s perceived ability and willingness to repay its debts. The ratings firm cited the government’s difficulties in meeting its self-imposed deficit targets and said the sharp rise in bond yields this year will further increase borrowing costs, making any debt solution 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.”

This story was originally featured on Fortune.com.