France sold 7.5 billion euros ($9.55 billion) in debt today, with two- and five-year borrowing costs falling to record lows after President Francois Hollande vowed to boost growth and cut debt over his term.
France sold 2.82 billion euros of five-year notes at an average yield of 0.76 percent, down from 0.92 percent on Oct. 18 and the previous record low of 0.86 percent on July 19. It also auctioned two -and-three-year securities at lower yields than at their last sales.
Hollande this week said he should be judged on jobs and growth at the end of his five-year mandate, rejecting calls for “shock” measures to jumpstart the economy. The French economy, Europe’s second-largest, expanded 0.2 percent in the third quarter after shrinking a revised 0.1 percent in the previous three months, national statistics office Insee said today.
Six months after gaining office, the Socialist president is struggling to retain support from those who voted for him while convincing critics including the International Monetary Fund that he’ll modernize Europe’s second-largest economy amid the region’s three-year-old sovereign debt crisis.
The IMF in Washington this month urged Hollande to embark on a “vigorous” revamp of the economy, saying its rigid labor rules and high costs are a “major challenge” to economic stability.
“Markets have been extremely benevolent” with France, Laurence Boone, an economist at Bank of America Merrill Lynch said today on Bloomberg Television. “France has delayed” a revamp of its economy because “it hasn’t been pushed by markets,” she said.
Borrowing costs in France have fallen even as the country grapples with unemployment at a 13-year high, a record trade deficit and an economy that is barely growing.
France today sold 2.54 billion euros of two-year securities at a record low average yield of 0.1 percent, down from 0.19 percent on Oct. 18. It sold 2.14 billion euros at 0.16 percent, lower than 0.95 percent on May 16.