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Home News France sells bonds at lower rates

France sells bonds at lower rates

Published on 16/05/2012

France raised more than nine billion euros ($11.4 billion) in bond sales on Wednesday in the first issue since Francois Hollande took over as president, promising a change in economic policy.

The rates that France had to pay were lower for its shorter-term debt but slightly higher for longer-term issues, treasury data showed.

Paris borrowed a total of 7.996 billion euros via bonds that mature in two, three and five years at rates that were lower than those offered during the last similar operation on April 19.

A breakdown of some of the sales showed that fixed-rate, annual interest debt which matures in two years found buyers at an interest rate of 0.74 percent, compared with 0.85 percent in the last auction.

Similar five-year debt fetched 1.72 percent, compared with 1.83 percent in the earlier operation, with the treasury underscoring that represented the lowest comparable rate since the eurozone was founded.

The treasury also sold bonds with maturities of 10, 11 and 15 years, and raised 1.182 billion euros, more than an initial target of 800 million euros.

But it had to offer slightly higher rates of interest, agreeing to a level of 1.25 percent for the 10-year bonds, compared with 0.97 percent during the last such operation on March 15.

French 15-year bonds found buyers at 1.45 percent, up from 1.28 percent the last time around.

In Spain, the interest rate, or yield on Madrid’s 10-year government bonds soared to a peak of 6.51 percent on Wednesday, a danger level widely considered too high for the state to afford over the longer term.

In Germany meanwhile, officials paid the lowest rate in the country’s modern history to borrow for 10 years, as investors scrambled to snap up debt issued by Europe’s top economy, seen as a safe-haven.

Germany paid an average rate of 1.47 percent at an auction of 10-year bonds, or Bunds, considered the gold standard of eurozone debt, said the German Finance Agency, which organised the sale.

This compared with a yield of 1.77 percent at the last such auction last month, which was already a record low.

The worsening Greek debt crisis has raised tension on eurozone sovereign debt markets, with investors holding out for higher rates to lend money to countries seen as potentially risky debtors.