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French borrowing costs edge up in debt auction
[April 19, 2012]
PARIS (AP)
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While demand was healthy, investors pushed for higher yields, or interest rates -- an indication of the perceived level of risk -- on a five-year bond. It rose to 1.83 percent from 1.78 percent when it was last issued. Though three other bonds were issued, no such comparisons were available for them. Two were brand-new instruments that had not been sold before. On the secondary market, where bonds are traded openly after they're issued, France saw the yield on its 10-year benchmark bond creep up slightly to 2.91 percent. That's still quite low; a year ago, it was over 3.5 percent. The French Treasury had set out to raise between euro9 billion and euro11 billion in a pair of auctions and easily hit that range. The first sale, which sold two-, three- and five-year bonds, saw intense investor demand, with one issue drawing bids from three times the number of investors who could be served. A second sale, for a six-year, inflation-linked bond, was less solid. It brought in euro2.5 billion, smack in the middle of the targeted range of euro2 billion to euro3 billion. Demand was least strong for that bond, about 1.7 times the amount served. France has occasionally been hit by investor concerns that its levels of debt are unsustainable. But recent months have seen a string of solid auctions, as European leaders promised to cut their spending and governments across the continent implemented austerity packages. In recent weeks, though, those concerns have begun to resurface as Spain and Italy have seen their borrowing costs rise. While France is significantly better off than those countries, the size of its economy and its central role in Europe makes any uptick in it borrowing costs worrying. |
