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France places 10-year bonds at under 2% for first time

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(Globalpost/GlobalPost)

France on Thursday placed 10-year bonds on the primary market at a yield of under 2.0 percent for the first time, according to data released by the country's debt management agency.

Agence France Tresor said that it raised a little over 2.0 billion euros ($2.6 billion) at a historic low average rate of return to investors of 1.94 percent.

The yield on French 10-year government bonds has dipped below 2.0 percent several times December in trading between investors on the secondary market since last December, but not in primary auctions.

In the previous auction of 10-year bonds on March 7 the rate of return to investors was 2.10 percent.

Thursday's auction enjoyed strong demand by investors of around three times the nearly 7.0 billion euros in medium- and long-term bonds sold, at the upper end of the intended amount to be placed.

France also raised nearly 2.5 billion euros in 7-year bonds at 1.26 percent compared to 1.46 percent in an auction on January 3.

It also placed almost 2.5 billion in 8-year bonds at 1.54 percent. The AFT did not provide any comparison.

"French debt is holding up well in an environment where risk perceptions have risen a bit in the eurozone" following the Cyprus bailout and amidst the ongoing political impasse in Italy, said BNP Paribas bond analyst Patrick Jacq.

Foreign interest in French government bonds as remained strong as they are viewed as safe but carry a higher yield than German government bonds.

"There is also a positive effect tied to the Bank of Japan's measures which will provide lots of liquidity to the market. Right away investors showed a tendency to buy eurozone bonds, in particular those seen as safest," added Jacq.

The Bank of Japan embarked on a new era of huge spending Thursday by unleashing a flood of easy money, in its boldest attempt to drag the economy out of decades of crushing deflation.

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http://www.globalpost.com/dispatch/news/afp/130404/france-places-10-year-bonds-at-under-2-first-time-0