50-year French treasury bond draws big bucks

22nd February 2005, Comments 0 comments

PARIS, Feb 22 (AFP) - The French treasury's new 50-year bond has attracted orders worth more than EUR 15 billion (USD 19.8 billion), sources close the matter said Tuesday.

PARIS, Feb 22 (AFP) - The French treasury's new 50-year bond has attracted orders worth more than EUR 15 billion (USD 19.8 billion), sources close the matter said Tuesday.

The new issue, which will be the world's longest-dated government bond, has met broad-based demand from European investors, said one bond analyst.

"The new bond is attracting interest from a fairly broad range of investors," said Nathalie Fillet at BNP Paribas in London, with orders from both actively-managed funds as well as from long-term investors, such as pension funds.

Separately, a banking source said the French Treasury was likely to sell EUR 5 billion of the bond at an auction later this week.

Earlier Tuesday a spokesman for Agence France Tresor, which manages France's negotiable debt, said the yield on the new issue was now expected to be three to five basis points above the yield offered by the treasury's 20-year bond, which comes due in 2035, rather than the three to seven points initially expected.

"The premium has been reduced as a result of the strong demand," said the spokesman.

The French government decided to launch the 50-year security after consultations with international investors revealed healthy demand for such an issue, which would appear to meet the needs of pension funds.

The French state, as is the case in Germany and the United States, has until now made use of 30-year bonds.

In another development Standard and Poor's Ratings Services said it had assigned its AAA senior unsecured debt rating to the 50-year bond.

The agency also affirmed the AAA long-term and A-1-plus short-term sovereign credit ratings on France, with an outlook deemed stable.

"The affirmation reflects the expectation of continued, albeit gradual, fiscal consolidation in the medium term," said S and P's credit analyst Remy Salters.

"The ratings on France are also supported by the wealth and depth of its economy, which boasts a highly skilled and productive labour force, and by the long-standing consensus behind prudent macroeconomic policies across the main political forces."

© AFP

Subject: French News

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