PARIS: France’s €12bil (US$13.5bil) bond sale drew solid demand last Thursday, illustrating that the country has no issues raising new debt despite fiscal and political challenges.
Investors placed orders about 2.5 times the size of the deal, an uptick from the coverage ratio of 2.29 for a similar sale last month – the weakest demand since May, according to data compiled by Bloomberg.
The French Treasury offered notes maturing in 2036, 2038, 2043 and 2057. The auction followed a period of better performance for the country’s debt after a tumultuous few months, triggered by the energy shock and mounting concerns over the government’s ability to push through spending cuts to tame the budget deficit.
Bonds gained this week alongside a sharp slump in oil prices after a drubbing for US President Donald Trump’s Republican party in midterm elections raised bets on a quicker end the Iran war.
The 10-year bond was sold at a yield of 4.74% last Thursday, compared to 4.93% on the previous sale on Oct 1, which was the highest since 2002.
The premium investors demand to hold French 10-year debt over safer German peers has dipped back below 150 basis points (bps) after soaring to 178 bps last month, which was the highest in more than a decade. — Bloomberg
