Thursday, 03 January 2013 17:20
PARIS: France's long-term bond yields fell in the Treasury's first debt sale of the year on Thursday, as high appetite for liquid French paper outweighed a sovereign downgrade in November by Moody's rating agency.
The Agence France Tresor debt management agency said it sold 7.99 billion euros of long-term OAT bonds at auction, at the top of its projected target of 7-8 billion euros.
The average yield on the 10-year benchmark October 2022 OAT fell to a record low of 2.07 percent, down from 2.22 percent when it was last sold in October, as investors continued to seek the safety of the French market.
Total demand for the four lines on offer was 15.5 billion euros, with bids at 1.94 times the amount on sale.
The seven-year April 2020 OAT was sold at a yield of 1.46 percent, down from 3.29 percent in July 2011, and the yield on the 20-year October 2032 OAT fell to 2.84 percent from 4.15 percent in May 2011, the AFT said.
The average yield on the October 2019 OAT rose to 1.32 percent from 1.27 percent when it was last auctioned in December.
Appetite for French debt has stayed resilient despite the fact Standard & Poor's and Moody's both removed their triple-A sovereign ratings on France in 2012.
Fitch maintained its AAA on Europe's No. 2 economy in December but warned that there was little room for leeway as the country battles to bring down its public deficit in the face of sickly economic growth.
The yield on benchmark French 10-year government bonds fell below 2 percent for the first time in early December and yields along the curve hit record lows during the year as investors sought out paper offering higher returns than German Bunds while avoiding the risks of Italian and Spanish paper.
Center>Copyright Reuters, 2013