(Bloomberg) — France’s first syndicated bond sale in nearly eight months met a flood of demand from investors as the new government tries to muster enough support to pass a much-needed budget.
Orders for new banknotes due in 2042 could exceed 100 billion euros ($104 billion), a record high. Tuesday’s offering price will be 8 basis points above comparable bonds, people familiar with the matter said on condition of anonymity.
The country’s last syndicated issuance (inflation-linked bonds) was in May, less than a month before French President Emmanuel Macron called early parliamentary elections and plunged the country into a period of political turmoil.
Final Spread: French Euro Benchmark Long 15 Year OAT 8
France’s borrowing costs have risen sharply over the past six months as investors demanded greater compensation to sustain France’s debt through a period of political instability. The previous government, led by Michel Barnier, collapsed after failing to gain enough support for a budget that included massive spending cuts to tackle the country’s huge budget deficit.
Prime Minister François Bayrou faces a similar challenge. He survived a no-confidence vote held last week as both the far-right and the Socialists, who had colluded to remove his predecessor, abstained. However, the outlook remains uncertain.
The spread between France and Germany’s 10-year bond yields, a closely watched risk indicator, fell last week by the most since October and was stable at around 78 basis points (bp) as of Tuesday.
Although debt syndicates are typically more expensive than auctions, they allow governments to raise large amounts of capital quickly while diversifying their investor base.
(Updates order and price details from first paragraph.)
See more articles like this at bloomberg.com
