France’s First Bond Sale Via Banks Since May Gets Snapped Up

(Bloomberg) — France’s first syndicated bond sale in about eight months met a flood of investor demand as the new government attempts to muster enough support to pass a much-needed budget.

Orders for the new note maturing in 2042 blasted past €100 billion ($104 billion), potentially a record. Tuesday’s offering will price at eight basis points over comparable bonds, according to people familiar with the matter who asked not to be identified.

The country’s last syndicated offering — an inflation-linked bond — was in May, less than a month before French President Emmanuel Macron called early legislative elections and plunged the country into a period of political turmoil. 

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France’s borrowing costs jumped sharply over the past six months as investors demanded greater compensation to hold its debt through a period of political instability. The previous government, led by Michel Barnier, collapsed after failing to win enough support for a budget that included big spending cuts to tackle the country’s large deficit.

Prime Francois Bayrou is facing similar challenges. He survived a no-confidence vote last week with both the far-right and the Socialists — who joined up to push out his predecessor — abstaining. But the outlook remains uncertain. 

The gap between French and German 10-year yields, a closely-watched risk gauge, last week fell the most since October and was steady at around at 78 basis points on Tuesday. 

Debt syndications are typically more expensive than auctions, but they allow governments to raise large sums quickly while diversifying their investor base. 

(Updates with orders and pricing details from first paragraph.)

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