France’s cost of borrowing has risen to the point that it has effectively lost its triple-A rating, even if the ratings agencies haven’t downgraded it yet.

“France isn’t trading like a aaa,” said strategist for Newedge Group in London, Bill Blain. “The market has made its judgment already.”

Glendevon King Asset Management’s Nicola Marinelli agreed. “France is not a aaa at all,” he said. “French banks are very exposed to eurozone periphery. If they were to market these loans at current levels, there would be huge losses.”

On Tuesday, the interest rate on a 10-year government bond was 3.5 percent—around halfway between fellow aaa country the Netherlands and Aa1-graded Belgium. French borrowing costs are about 1 percentage point higher than in the UK and over 1½ percentage points higher than in Germany. Rates may climb above 5 percent, said analysts at Credit Suisse Group AG.

Ratings agency Moody’s warned that the rising interest rates and slow growth threatened France’s credit outlook and that the nation faces “significant downside risks.”

The Telegraph’s Liam Halligan speculates that when Standard & Poor’s downgraded France a few weeks ago, it may not have been a mistake. “As French yields spiked alarmingly last week, Standard & Poor’s apparently downgraded the country’s top triple-A rating, a decision which was then reversed,” he writes. “Was this downgrade really an unfortunate ‘mistake,’ as was later claimed? Or did the French government bring almighty pressure to bear on the ratings agency, forcing them to retract?”

“Did the eurozone’s political leaders come down on S&P like a ton of bricks?” he asked. “If so, the integrity of the entire Western financial system, such as it is, is now on the line.”

“France has the biggest debt burden of the top-rated euro nations, at 85 percent of gross domestic product,” writes Bloomberg. “Its financial institutions also have the largest debt holdings in the five crisis-hit countries, at €681 billion (us$921 billion) as of June, according to data from the Bank for International Settlements in Basel.”

France’s economic woes show it is not in the same economic league as Germany. If France loses its aaa rating, the crisis will get much worse.