French Sovereign

A hotly contested battle for the French presidency has quieted much of the public sector market this week, but KfW has picked banks for a five year euro benchmark.

The French presidential election saga has taken another twist, with far-right candidate Marine Le Pen’s chances slipping — but those of Jean-Luc Mélenchon, from the other extreme of the political spectrum, rising. Asian investors are pulling back from deals until the election hurdle is cleared, say issuers — but the rise of Mélenchon may also provide an earlier than expected relief rally.

Expecting the unexpected has been market philosophy since the Brexit vote last June. Adherents may well have thought that made Marine Le Pen a certainty to win this year’s French presidential election.

Guarantor: Republic of France

Wobbles in eurozone government bond secondaries this week failed to deter a strong showing from a pair of public sector issuers in primary on Tuesday. Unédic found strong demand and tightened from guidance on its longest dated benchmark ever, while Austria broke a series of records with a 10 year euro benchmark.

Once France broke international records for sovereign defaults, thanks to wars, money printing and dodgy liability management.

The pace of borrowing has slackened for public sector borrowers as Easter approaches but a few are still out hunting for second quarter funding.

Unédic and Austria have announced that they will sell euro benchmarks at the long end of the curve on Tuesday.

Fears of Marine Le Pen winning this year’s French presidential election may have receded but investors should be hoping that her loss will be to frontrunner Emmanuel Macron — and not to former favourite François Fillon.

The brace of deals printed last week proved evenly matched under the scrutiny of the GC BondMarker voters.

Investors looking for new public sector avenues in which to deploy their cash can now turn to Moody’s to provide ratings for otherwise unrated public sector borrowers in the UK, France and Germany.

This week's funding scorecard looks at the progress French agencies have made in their funding progress so far this year.