France borrowing for 50 yrs to tap investors tired of no yield


French bonds fell as investors awaited the government’s sale of ultra-long securities.
The planned issue of 20- and 50- year debt, which will be conducted via banks and may price on Tuesday, was announced by the French Treasury. The nation is looking to raise longer-term funds to benefit from the euro zone’s low interest rates, while investors will likely be attracted to the bonds to lock in better returns than are available on shorter-dated securities. More than a third of the region’s bonds now yield less than zero.
Ultra-long maturities such as 50-year debt aren’t eligible for the European Central Bank’s quantitative-easing asset-buying program, which has helped depress yields on shorter-term bonds. Only Ireland and Belgium have debt maturing later than France’s planned issue.
“They want to lock in low funding costs,” said Martin van Vliet, senior interest-rate strategist at ING Groep NV in Amsterdam. “The timing is right” with the ECB set to maintain its easy monetary policy, he said.
The decline in French bonds was part of a broad-based selloff in European debt markets, with longer-dated maturities bearing the brunt of the losses.
France’s 30-year bond yield rose six basis points, or 0.06 percentage point, to 1.47 percent as of 11 a.m. London time, having climbed earlier to 1.48 percent, the highest since March 23. The 3.25 percent security due in May 2045 fell 1.71, or 17.10 euros per 1,000-euro ($1,142) face amount, to 141.92.
The yield on the nation’s debt due in April 2060 climbed six basis points to 1.69 percent, after rising Monday by the most since March 2.

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