* France launches 7 billion euro, 30-year bond sale
* Investors pile into bond, demand over 31 billion euros
* France's 10s/30s yield spread widest since Dec 2014
* Germany, Belgium among potential sellers of long-dated
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
(Updates with bond sale details)
By Abhinav Ramnarayan and Dhara Ranasinghe
LONDON, May 16 France received more than 31
billion euros of orders for a new 30-year bond on Tuesday,
highlighting strong demand for a sale seen as the first big test
of sentiment after centrist Emmanuel Macron won the presidential
The 7 billion euro bond is being sold via a syndicate of
banks and is expected to be priced later on Tuesday.
Investor appetite for the bond, which analysts say was
helped by a cheapening of French debt in past weeks, sparked an
outperformance of 30-year French bond yields,
which fell 3 basis points in late trade.
"The 30-year area has been relatively cheap so it is no
surprise to see strong demand for this bond today," said Patrick
Jacq, Europe rate strategist at BNP Paribas.
Although French government bonds have rallied sharply since
it became clear Macron would beat far-right leader Marine Le Pen
to the presidency, longer-dated bonds had lagged the move.
France opened books on the deal around 0830 GMT on Tuesday,
having recorded interest in excess of 18 billion euros even
before it started taking orders.
The bond matures in May 2048, three years later than the
current 30-year benchmark but still eligible for ECB purchases
in June, according to Societe Generale.
Analysts said the sale was also a barometer of investor
sentiment towards France ahead of parliamentary elections in
June that will determine whether Macron can govern with a
Macron appointed a conservative prime minister on Monday in
a move to broaden his political appeal and weaken his opponents
before the two-round vote.
The sale could also indicate whether Japanese investors, key
lenders to France, are returning.
"Japanese investors have been large buyers of French
securities and given that the political risk has reduced, we
should see a gradual return to this market," said Antoine
Bouvet, rates strategist at Mizuho.
Tuesday's sale will also demonstrate investor appetite for
duration, particularly with other long-dated bond sales expected
from Germany, euro zone bailout fund EFSF and possibly Belgium.
Ahead of the sale the gap between 10- and 30-year French
bond yields briefly reached 108 basis points, its widest since
December 2014, as investors made room by selling some of their
existing longer-dated French debt.
Germany is scheduled to sell 30-year bonds on Wednesday
while Belgium has cancelled a bond auction for next
week. Analysts said that may be because the Belgian debt agency
is planning a 15- or 20-year bond sale this week.
The European Financial Stability Facility, the euro zone's
bailout fund, is widely expected to sell long-dated bonds this
week, while Slovenia was selling bonds maturing in 2027 and 2040
Elsewhere, further signs of strength in the euro zone
economy and renewed confidence in the European project boosted
sentiment towards lower-rated peripheral bonds.
Portugal's 10-year bond yield tumbled 9 bps to 3.29 percent
, pushing the gap over German peers
to its tightest in nine months at around 288 bps.
Italian bond yields fell 6 bps 2.21 percent,
while the Italian/German 10-year yield gap dropped below 180
basis points for the first time in a week.
Bonds from the bloc's periphery tend to perform well on
signs the euro zone economy is strengthening.
German Chancellor Angela Merkel and French president Macron
agreed on Monday to draw up a roadmap to deeper European Union
integration and opened the door to changing the bloc's treaties
to facilitate ambitious reform.
"Given Macron's election, the unity we've seen in Europe
around Brexit and positive growth data, we've been more
constructive on the periphery," said Nicholas Wall, a portfolio
manager at Old Mutual Global Investors.
"In terms of intra-Europe, we're definitely overweight
peripherals versus the core market."
(Editing by Catherine Evans and Richard Lough)