By Stephen Sandelius
PARIS (MNI) – France sold nearly E8 billion in medium-term debt
Thursday without difficulty and at lower rates than at the end of last
year, suggesting that investor confidence was little affected by last
week’s ratings downgrade by Standard & Poor’s.
The total volume sold was just E35 million below the upper limit
the Treasury had set at E8 billion, and the bid-cover ratio on all three
BTANs offered was comfortably above 2, with a high 3.42 for the July
2015 line.
“They sold the ceiling amount with very good cover,” observed
analyst Padhraic Garvey at ING. “It all looks pretty good.”
There had been little fear of fallout from the downgrade and indeed
the auction “has gone well,” the analyst said. “Happy days, the job’s
done.”
Compared to the previous auction in November, the average yield on
the five-year BTAN was down 93 basis points at 1.89%, while the two-year
line saw a decline of 53 bps to 1.05%.
The rates are “relatively low” — in line with the movement on
French paper in recent weeks — and no doubt reflect the impact of the
ECB’s massive three-year refinancing operation in December and prospects
for further easing in the ECB’s main refi rate, explained Cyril Regnat
at Natixis.
“It was a good auction with rather strong demand,” he said. “We
have the confirmation that the decision of S&P has not changed the
behavior of investors in French paper,” who got roughly double the
return compared to similar German or Dutch debt, he said.
France also placed E1.498 billion of inflation-indexed bonds
Thursday, just below the offer ceiling of E1.500. Cover ratios were
above 2.5 for all three lines, including 3.69 for the 10-year
HICP-linked OATei.
The average yield on the 2016 CPI-indexed BTANi dropped to 0.13%
from 1.78% at the November auction, while yield on the 10-year OATei
fell to 1.07% from 2.32%.
–Paris Newsroom, +331-42-71-55-40; ssandelius@marketnews.com
[TOPICS: M$F$$$,MGX$$$,MNXAU$,M$X$$$]