France Télécom's outstanding bonds have recovered from a volatile week thanks to speculation that it might launch a rights issue or sell shares in Orange, its mobile subsidiary, in a bid to cut debt.

Spreads, or yield premiums over government debt, on the French firm's bonds tightened by around 20 basis points (bp) in the cash market and by as much as 40bp in the credit default market on Friday morning, after significant widening the day before.