Rate on 10-year French bonds falls ahead of vote

4th May 2012, Comments 0 comments

The rate France must pay to borrow funds for 10 years fell to the lowest level for two months on Friday as the country prepared for the final round of a presidential election on Sunday.

The rate, or yield, on existing 10-year French bonds dropped to 2.786 percent from 2.901 percent late on Thursday, a level last seen in March.

A forecast victory by Socialist candidate Francois Hollande, who has led in opinion polls for several months, did not cause the yield to rise, and the latest fall on the secondary market came after France raised more than seven billion euros ($9.2 billion) at easier rates on Thursday.

The difference between French and German 10-year rates on public debt markets narrowed to 1.17 percent, as the German rate rose to 1.618 percent.

Investors were also attracted by 10-year bonds issued by Italy and Spain, even though those two countries are considered greater risks owing to their economic and financial problems.

The rate on 10-year Spanish debt fell further from the psychological benchmark of six percent, at 5.626 percent compared with 5.760 percent on Thursday, while the Italian rate eased to 5.37 percent from 5.488 percent.

© 2012 AFP

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