France Borrows for 50 Years to Tap Market Tired of No Yield

  • Nation selling EU9 billion of 20-, 50-year bonds via banks
  • `Timing is right' for France, says ING's Martin van Vliet

France Said to Be Selling 20-Year, 50-Year Bonds

France’s bonds fell as the government was said to sell ultra-long securities.

The country’s Treasury is placing 3 billion euros ($3.4 billion) of debt due in May 2066 and 6 billion euros of bonds maturing in May 2036 via banks on Tuesday, according to a person familiar with the matter, who is not authorized to speak publicly and asked not to be identified.

The nation is raising longer-term funds to benefit from the euro zone’s low interest rates, while investors were attracted to the bonds to lock in better yields than are available on shorter-dated securities. More than a third of the region’s bonds now yield less than zero. The 20-year bond was priced to yield 1.31 percent, and the yield on the 50-year security was 1.916 percent, the person said.

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 that may be bought. 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 eight basis points, or 0.08 percentage point, to 1.49 percent, the highest since March 23, as of 4:40 p.m. London time. The 3.25 percent security due in May 2045 fell 2.435, or 24.35 euros per 1,000-euro face amount, to 141.195.

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