French Debt Costs Rise at Bond Sale as AAA Decision Looms

France sold 7.96 billion euros ($10.2 billion) of debt, with 10-year borrowing costs rising in the country's first bond auction of the year as credit-rating companies threaten to cut the nation's AAA grade.

The government sold 4.02 billion euros of the bonds maturing in October 2021 at an average yield of 3.29 percent, from 3.18 percent on Dec. 1. The euro fell to its weakest level against the dollar in 15 months, and the extra yield investors demand to hold French 10-year bonds instead of benchmark German bunds widened to the most in about six weeks.

"There's still the threat of a downgrade hanging over France and until we get that situation cleared up you can't signal the all-clear," said Eric Wand, a fixed-income strategist at Lloyds Bank Corporate Markets in London.

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- Posted: 2012-01-05 12:20:30

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