In its first bond sale since the presidential election and the first big test of investor sentiment after Emmanuel Macron won the presidency, France received more than 31 billion in demand for a 30-year bond offering, once again demonstarting the unprecedented demand for duration on the yield-starved continent where the ECB is happily gobbling up every interest-yielding instrument. With some 7 billion in ultra-long duration paper sold via a syndicate of banks, pricing at 30Y FRTR +12, tighter than the +14 price talk, the issue was more than 4 times oversubscribed.
Investor appetite for the bond, which some said helped by a cheapening of French debt in past weeks, also sparked an outperformance of 30-year French bond yields, which fell 3 basis points in late trade. When France opened books on the deal around 0830 GMT on Tuesday, interest was already in excess of 18 billion even before it started taking orders, according to Retuers IFR. It nearly doubled over the course of the day.
“The 30-year area has been relatively cheap so it is no surprise to see strong demand for this bond today,” said Patrick Jacq, rate strategist at BNP.
It goes without saying that a main driver for the investor interest is that while the bond matures in May 2048, three years later than the current 30-year benchmark, it is still eligible for ECB purchases in June,
This post was published at Zero Hedge on May 16, 2017.
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