Bloomberg News

French 5-Year Notes Fall, Yields at 6-Month High, Before Sale

November 17, 2011

Nov. 17 (Bloomberg) -- French five-year notes dropped, pushing yields to a six-month high, before the nation sells as much as 7 billion euros ($9.45 billion) of notes and up to 1.2 billion euros of inflation-linked debt.

The additional yield investors receive for holding 10-year French securities instead of benchmark German bunds was within four basis points of the euro-era record 193 basis points reached yesterday. Spain plans to auction a maximum 4 billion euros of bonds due in 2022.

The French five-year yield climbed four basis points, or 0.04 percentage point, to 2.82 percent at 7:28 a.m. London time, after rising to 2.85, the highest since May 5. The 2.5 percent note maturing in July 2016 fell 0.155, or 1.55 euros per 1,000- euro face amount, to 98.610.

Benchmark 10-year German bund yields were little changed at 1.82 percent.

The last time France auctioned five-year notes, it agreed to pay a yield of 2.31 percent, and got bids for 3.63 times the 1.485 billion euros of debt it sold.

Spain raised 1.79 billion euros from selling 10-year bonds on Oct. 20, with a so-called bid-to-cover ratio of 1.76 times. The yield was 5.433 percent.

German government bonds have returned 8.9 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. French debt handed investors a 3.8 percent loss.

--Editor: Nicholas Reynolds, Mark McCord

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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