By Mark Deen and Paul Dobson - Jan 5, 2012 5:25 PM GMT+0700
France sold 7.96 billion euros ($10.2 billion) of debt today, with borrowing costs rising in its first bond auction of the year as credit companies threaten to cut the nation’s AAA rating.
The government sold 4.02 billion euros of benchmark 10-year bonds at an average yield of 3.29 percent from 3.18 percent in an auction on Dec. 1. The 10-year debt bid-to-cover ratio, or the number of bids received for each unit of debt sold, fell to 1.64 from 3.05. France also sold debt maturing in 2023, 2035 and 2041.
France needed to “sell longer-term debt because that’s what investors and ratings agencies are watching in terms of a signal of confidence,” Michael Leister, a fixed-income strategist at DZ Bank AG in Frankfurt, said before the auction results were announced. “The market is wary of the financing agency going for the easy option.”
The euro extended its decline against the dollar after French borrowing costs rose at a sale of bonds. The 17-nation common European currency was 0.9 percent weaker at $1.2832 at 10:08 a.m. London time.
The French sale came a day after Germany sold 4.1 billion euros of bonds, getting more bids than its maximum target of 5 billion euros. The German sale kicked off a rush for funding that may determine whether euro-area leaders can save the 13- year-old single currency. Italy and Spain are among countries that in the coming weeks will sell debt that may reach 262 billion euros in the first quarter, according to Deutsche Bank AG forecasts.
To contact the reporters on this story: Mark Deen in Paris at markdeen@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net
To contact the editors responsible for this story: Vidya Root at vroot@bloomberg.net Daniel Tilles at dtilles@bloomberg.net
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