French 10-year bond yield hits record low of 1.77%

The rate of return of 10-year French government bonds fell to a record low on Thursday, as measures by the European Central Bank (ECB) underpin activity on markets that trade eurozone debt.

The news will be welcome in Paris, where the government is struggling to get its finances in line with European Union targets.

France issued nearly 3.398 billion euros ($2.49 billion) in benchmark 10-year bonds at a rate of 1.77 percent, treasury data showed, better than the previous all-time low of 1.81 percent seen on May 2, 2013.

In its last comparable bond issue on June 5, Paris offered to pay interest of 1.96 percent.

In recent months, government debt markets have been supported by generous central bank monetary policies, in particular that of the ECB which unveiled new measures in early June.

On secondary markets where government bonds are traded, the yield on 10-year French debt fell to a record low of 1.656 percent on June 6, beating the previous record of 1.659 percent set in May 2013.

Meanwhile, Paris is trying to bring its public deficit in line with EU rules, but is likely to overshoot targets again this year, auditors warned on June 17.

The National Accounting Court said the deficit was heading for 4.0 percent of output in 2014, well above the EU ceiling of 3.0 percent.

In 2013, France’s public debt amounted to 93.5 percent of gross domestic product (GDP), well above the EU limit of 60 percent.