FRANCE successfully sold €8bn (£6.6bn) of its debt at a closely-watched auction yesterday, but its borrowing costs edged higher and investor demand for its 10-year debt dropped sharply.
France, which has been plagued by fears it could lose its much-coveted triple-A debt rating, sold €4.02bn of 10-year Oat bonds with yields up to 3.29 per cent, slightly higher than the 3.18 per cent it paid last month.
Demand for the 10-year paper fell sharply, with the auction drawing bids worth 1.643 times the amount on offer compared to 3.046 times at a similar sale in December.
France’s debt sale followed a similarly uncertain auction of German bunds on Wednesday, where investors bought just €4bn of the €5bn on offer.
Marc Ostwald, a strategist at Monument Securities, said: “All in all, reasonably solid cover. It was always going to look much better than the Bund, simply because you are on completely different yield level.”
However, France’s successful debt auction failed to boost investor sentiment, which was dragged lower by fears that Hungary could default on its debts and escalating concerns over Eurozone bank funding.