Demand for French government bond auctions diverges, with long-term yields rising significantly

(1) The French Ministry of Finance auctioned four tranches of government bonds on Thursday, with a total issuance of approximately €12 billion. (2) The bond maturing in November 2036 had an issuance of about €6.3 billion, an average yield of around 4.9%, and a bid-to-cover ratio of about 2. (3) The bond maturing in June 2037 had an issuance of about €1.5 billion, an average yield of around 5%, and a bid-to-cover ratio of about 3. (4) The bond maturing in May 2038 had an issuance of about €2.1 billion, an average yield of around 5.1%, and a bid-to-cover ratio of about 2.5. (5) The bond maturing in May 2048 had an issuance of about €2.1 billion, an average yield of around 5.4%, and a bid-to-cover ratio of about 2.4. (6) Judging by the bid-to-cover ratios, the bond maturing in June 2037 saw relatively stronger demand, while longer maturities had slightly lower coverage. (7) The average yields for all maturities were generally higher than previous auction levels, indicating an increase in France’s financing costs. (8) Overall, the auction results were acceptable, but the rise in long-end yields and the divergence in bid-to-cover ratios reflect continued caution in the market regarding France’s fiscal outlook and the interest rate environment. Close attention should be paid to secondary market trends and the pace of future issuances.