French long-term debt yields fall in post-break auction
PARIS (Reuters) - The yield on France's benchmark 10-year bond hit a record low at the first auction since the summer break, the official debt agency said on Thursday, underscoring the appeal of French paper as a relative safe haven despite the country's own debt burden.
The main investor focus was on the ECB press conference at 1230 GMT when President Mario Draghi is expected to outline a plan to help bring down the borrowing costs of more troubled debtor countries.
Agence France Tresor said it sold 7.98 billion euros of long-term debt, known as OATs, at the top of its projected range of 7 billion to 8 billion euros.
The average yields on the 10-year bond with a coupon of 3 percent due in April 2022 fell to 2.21 percent from 2.53 percent when last auctioned on July 5, AFT said.
The yield on the 4.25 percent 5-year OAT due in October 2017 fell to 1.05 percent from 1.89 percent on May 3.
The AFT also sold a new bond, the 2.75 percent OAT due in October 2027 for a yield of 2.85 percent.
That was in the range of a 14-year bond with a 3.5 percent coupon that the agency sold on June 7 at a yield of 2.9 percent.
France's deep and liquid bond market has encouraged investors to shelter there from concerns over the health of the Spanish and Italian economies, even though shrinking forecasts for French economic growth are further complicating the three-month-old Socialist government's efforts to curb its budget deficit.
France took a month-long break during August from selling medium- and long-term debt. But it continued to sell T-bills at mostly negative yields.
Yields of Spanish and Italian government bonds also fell in the market on Thursday on expectations the European Central Bank would flesh out details of a bond-buying plan.
(Reporting By Alexandria Sage; Editing by Ruth Pitchford)
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