Investors still have an appetite for French bonds. A Thursday auction of 10- to 30-year sovereign debt saw higher yields, but buyers were ready to open their wallets nonetheless. Although stocks and the euro were both lower in morning European trading, markets seemed not quite as nervous as they could be with France’s triple-A rating hanging in the balance.
Reuters reported that concerns about the auction’s outcome had risen on worries that banks would have a hard time finding sufficient capital to fix their balance sheets. Italy’s UniCredit sold shares at a 43% discount on Wednesday, as reported by AdvisorOne.com, and its shares fell, fueling more fears.
However, while not outstanding, the Thursday sale was viewed as positive. France sold 7.96 billion euros ($10.3 billion) of 10- to 30-year bonds at the auction, at the top of its projected range. Michael Leister, a strategist at DZ Bank in Frankfurt, Germany, was quoted saying, “[The French auction result is] nothing to get excited about. But, at the same time, it should be enough to dispel concerns with regards to France’s funding capacity for the time being.”
Traders are concerned about the amount of eurozone debt maturing in 2012, particularly from Italy. Richard McGuire, senior fixed income strategist at Rabobank in London, said in the report, “Given the clear risk of an imminent ratcheting up of market tensions as Italy’s February-April redemption hump looms closer, today’s sales should be seen as a successful battle rather than in any way determining the outcome of the war.”
Germany sold 4.06 billion euros of 10-year bonds on Thursday as well, at its first auction of the new year.