Firm demand for French final 2010 bond issue: analyst

2nd December 2010, Comments 0 comments

France encountered firm demand for its last issue of long-term bonds amounting to 5.395 billion euros on Thursday, completing medium and long-term borrowing of 200 billion euros this year, market sources said against a background of great uncertainty on eurozone debt markets.

The latest bundle of borrowings concerned bonds issued to mature in 2017, 2018 and 2025.

The French treasury had intended to raise 4.5 billion to 5.5 billion euros at the debt auctions on Thursday. The issues were oversubscribed by a factor of three.

This was the last such issue of long-term debt under the borrowing programme for 2010.

Bond strategist at Natixis bank, Jean-Francois Robin, said France had planned to borrow 188 billion euros (247 billion dollars) on the medium and long-term markets this year.

It had exceeded this figure, borrowing more than 200 billion euros and intended to borrow 186 billion euros on the short-and medium-term markets next year, he said.

France has stressed in recent days that its high-level credit standing on the debt market is secure and that France is not threatened by the debt crisis that has pushed Greece and Ireland into rescues and is seen as threatening Spain and Portugal.

Spain had to raise sharply the rate it offered to attract investors to buy three-year debt on Thursday, and on Wednesday it announced extra privatisations to raise money to ward off pressure from the debt market.

On Wednesday, Germany, the top-quality benchmark country in the eurozone, struggled to auction some bonds to raise funds.

The ECB monetary policy meeting was meeting on Thursday and was widely expected to signal more help for eurozone banks and bondholders, and indirectly for indebted governments, by means of buying government bonds from banks.

The French treasury did not give comparable interest rates with previous similar auctions.

At the sale on Thursday, the treasury borrowed 2.535 billion euros until 2017 at an effective rate or yield of 2.62 percent, 1.030 billion euros until 2018 at 2.92 percent and 1.830 billion euros until 2025 at 3.57 percent.

It is normal for the rate to rise with the length of the loan because time is risk.

© 2010 AFP

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