France pays increased rate in 10-year bond issue

3rd November 2011, Comments 0 comments

France had to pay an increased interest rate for 10-year money when it raised 6.9 billion euros ($9.45 billion) in long-term issues on Thursday.

The French treasury agency responsible for debt issues placed bonds maturing in 2017 and 2021. The rates paid rose from the rates at the last similar issue. The agency also issued debt maturing in 2026 at a reduced rate.

The spread between French and benchmark German bonds was reduced slightly but remained high.

The difference between the two countries' 10-year rates was 140 basis points before Thursday's issue, which dropped to 132.4 points on secondary markets were bonds are traded after being issued.

The rate for French 10-year bonds was 3.188 percent compared to 3.081 percent at closing on Wednesday, having reached a high of 3.257 during the day.

The issue was closely watched by a bond market that has become increasingly tense with the surprise announcement by Greece of a referendum on a eurozone debt rescue package.

On Thursday, France borrowed 3.110 billion euros to be repaid in 2017 at a rate of 2.34 percent, compared to 2.00 percent at the last issue on October 6. The offer was oversubscribed 1.5 times.

France also borrowed 2.865 billion euros to be repaid in 2021 at a rate of 3.22 percent, compared to 2.72 percent on October 6. Demand was double the offer.

And finally France borrowed 985 million euros to be paid back in 2026 at a rate of 3.77 percent, down from 4.03 at the last such offer in May, with the offer 2.5 times oversubscribed.

© 2011 AFP

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