In the opening hours in Paris, shares of Vinci SA, Eiffage SA and Aeroports de Paris SA fell 3% to 5%, despite broader European gains. The slide erased more than €2 billion from the group's combined market capitalization.
In a statement late Monday, the French government said it wants to lift the current 4.6% flat tax on operators of long-distance transport infrastructure in steps, reaching up to 12.2% for the most profitable firms. The measure is part of 2027 budget discussions, with the budget bill slated for official unveiling on Thursday.
Morgan Stanley estimates the higher levy would reduce 2027 earnings for companies such as Vinci, Eiffage and ADP by 9% to 12%. According to RBC Capital Markets, the proposal may add additional pressure to investor appetite for French assets, although they judge that a good portion of the worries is likely reflected in prices already. Analysts Ruairi Cullinane and Jakub Glinkowski wrote, "The move could also be unhelpful for perceptions of French political risk (ahead of the budget and also Presidential elections next year), although we think elevated French political risk is discounted in Vinci and Eiffage shares already." Bloomberg sought comment from the companies. Vinci's shares are trading near their lowest valuation in roughly 13 years outside the Covid period.
This sector faces another overhang after political risk rose when President Emmanuel Macron called surprise general elections in June 2024. Elevated borrowing costs are another drag. Infrastructure names with heavy debt loads have typically underperformed when government bond yields are high. France's 10-year OAT sits at 4.75%, the highest since the 2008 financial crisis.
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If you hold anything tied to regulated infrastructure, this mix of higher potential taxes and pricier debt is the key story to watch.
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