Investors showed strong appetite for highly-rated government debt at a French bond auction on Thursday against a backdrop of persistent concern about Greece's ability to finance its debt after its poor bond sales this week. The French sale of 8.4 billion euros of OAT bonds came after Fitch Ratings affirmed France's triple-A rating with a stable outlook, saying the country had weathered the financial crisis fairly well.
Analysts said this also lent support to the sales ahead of market closures in Europe for the Easter break. Markets reacted poorly to the Greek sales, driving the 10-year bond yield spread against Bunds wider as investors fretted over the country's ability to continue funding its deficit. France sold close to the upper end of an initial target range of 7.0-8.5 billion euros.
Of the four bonds on offer, with maturities ranging from 2015 to 2025, three were off-the-run issues, with only an April 2020 bond a current benchmark. The lukewarm reception for the Greek supply was contrasted by a series of well-bid auctions on Tuesday from Italy, which is seen as the benchmark for euro zone peripheral issuers. Slovakia scrapped an auction of government bonds scheduled for April 1.
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