French bonds hit record low despite downgrades

AFP - [email protected]
French bonds hit record low despite downgrades

France borrowed about €8 billion ($10.6 billion) at record low rates on Thursday, the country's debt agency said, in its first long term bond auction of 2013 in a sign that investors are still looking past a fragile French economy and recent downgrades by credit agencies.


The sale continued a particularly good stretch seen by the government in 2012 when France borrowed at rates lower than ever, despite slowing growth and the country's loss of its top notch rating from agencies Standard & Poor's and Moody's.

"For the benchmark 10-year debt that is of particular interest, the French rates continue their downward trend," said Rene Defossez, bond strategist at Natixis.

The agency said it sold €3.53 billion in bonds to mature in October 2022 at an average rate of 2.07 percent, down from 2.22 percent at a similar sale in October.

This was the lowest rate on record paid by France paid for 10-year debt.

The slide in rates was significant for longer term debt as well. France sold €1.165 billion in bonds set to mature in October 2032 at 2.84 percent, down sharply from 4.15 percent at a similar auction in May 2011.

Rates for bonds maturing in 2020 and 2019 also dropped significantly.

France plans to borrow €169 billion in medium and long term debt in 2013, down from €178 billion in 2012.


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