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. France has the biggest debt burden of the six top-rated euro nations, at 85 percent of gross domestic product.
Other Sales Sarkozy Efforts Low Cost The average financing costs of medium and long-term French debt remains low. France Downgraded by S&P, Others Likely to Follow: Reports : Report - Business News. "The consequence (if France is downgraded) is that the EFSF cannot keep its triple-A rating," said Commerzbank chief economist Joerg Kraemer. "That may irritate markets in the short term but wouldn't be a big problem in a world where the U.S. and Japan also don't have a triple-A rating anymore. Triple-A is a dying species," he said. A spokesperson for S&P in Paris declined to comment on the reports.
John Wraith, Fixed Income Strategist at Bank of America Merrill Lynch told CNBC the confirmation of a mass downgrade would be another serious step in the crisis and would lead to a serious worsening of sentiment. "To a large degree it’s widely anticipated," Wraith said. “It clearly deteriorates still further the credit worthiness of a lot of the European banks and just keeps that negative feedback loop between struggling banks and the sovereigns that may have to support them if things go from bad to worse in full force,” Wraith added. —Reuters contributed to this report. Sarkozy vows reform after France downgrade. Sarkozy Dealt Blow 100 Days Before Election With French Loss of AAA Rating. President Nicolas Sarkozy has fewer than 100 days before French elections to overcome the blow dealt by Standard & Poor’s decision to strip the country of its AAA credit rating for the first time.
After saying in October that he would do everything possible to retain the top credit rating that one of his advisers called a “national treasure,” the cut to AA+ may hurt Sarkozy’s reputation for economic management and diminish his stature in discussions to end the European debt crisis, said political analysts such as Emmanuel Riviere, a pollster at TNS Sofres in Paris. “Sarkozy has built his whole strategy on being the most credible candidate on the economy, on being the surest leader in a crisis,” Riviere said. “That line is getting harder and harder to hold. It’s getting harder to say that he’s an equal in the Franco-German couple, that he’s a power at European summits.”
Muted Reaction History suggests reaction may be limited. “It’s not a catastrophe,” Finance Minister Francois Baroin said. After the downgrades comes the downward spiral. DEVELOPMENT: France Steps Forward With Robin Hood Tax. PARIS, Jan 14, 2012 (IPS) - The decision by French President Nicolas Sarkozy to push ahead with a financial transactions tax (FTT) may be a political ploy ahead of elections, but it has the approval of many non-governmental organisations, even as support lags elsewhere. "If France is setting an example, we support this as a principle," said Matt Davies, head of international policy and advocacy for international movement ATD Fourth World, a French-based organisation that works to eradicate extreme poverty.
"I think there’s a consensus in society that there should be a far greater accountability by the financial sector," he told IPS in an interview. "What’s important is that the money that’s brought in by the FTT should go towards combating poverty, but we’re slightly sceptical in some ways because we often see that money destined for development doesn’t reach the poorest people.
" That is a line that echoes the French position. Sarkozy to announce tax rises Sunday: government source. Merkel Meets Sarkozy to Draft EU Fiscal Rules as Part of Euro-Rescue Plan. German Chancellor Angela Merkel and French President Nicolas Sarkozy plan to drive forward their agenda for stricter budget rules as they seek to craft a master plan for rescuing the euro over the next three months.
The euro rose as the two leaders met in Berlin to flesh out a rulebook for budgetary discipline negotiated at a Dec. 9 summit that seeks to create a “fiscal compact” for the 17- member euro area. At their first meeting of 2012, they also plan to discuss a financial-transaction tax, progress on Greece’s second bailout and a Jan. 30 European summit that will focus on bolstering growth, the German government said.
The German and French leaders have sponsored a plan to draw up new fiscal guidelines by March to resolve a crisis that began in Greece more than two years ago. As the contagion moves to the euro-area’s core, policy makers are struggling to persuade investors they can contain the risk and assure the single currency’s survival. Close Open Euro, Stocks ‘Not Good’ Belgian Test. Germany's stance on financial transaction tax risks French rift. However, a draft copy of the summit agreement leaked last week suggested the talks had hardly progressed since the last summit.
Raoul Ruparel, of think-tank Open Europe, said: "Until the significant amount of uncertainty is removed from the fiscal compact – in terms of implementation, use of institutions, timeline, severity of sanctions and exceptions – it is likely that markets will continue to be underwhelmed by it. " But experts were encouraged that the leaders promised to focus on measures for economic growth and job mobility as well as austerity plans at the summit on Monday.
Meanwhile there were continued signs of stress across the eurozone. In Italy, shares in Unicredit were suspended again as traders dumped stock ahead of a rights issue. The fate of the stricken bank is rapidly extinguishing confidence of other lenders that need to raise cash. The big European stockmarkets closed down about half a percent each.
Germany sold €3.9bn of short-term debt at a yield of –0.0122pc. France makes it harder to become French - FRANCE. Issued on: 29/12/2011 - 14:24Modified: 30/12/2011 - 13:26 France will be making it harder for foreigners to seek French citizenship as of January. Critics say the new requirements, which include tough language tests and allegiance to “French values”, are an electoral ploy that panders to the far right. Foreigners seeking French nationality face tougher requirements as of January 1, when new rules drawn up by Interior Minister Claude Guéant come into force. Candidates will be tested on French culture and history, and will have to prove their French language skills are equivalent to those of a 15-year-old mother tongue speaker.
“Becoming French is not a mere administrative step. Guéant, a member of President Nicolas Sarkozy’s ruling UMP party, described the process as “a solemn occasion between the host nation and the applicant”, adding that migrants should be integrated through language and “an adherence to the principals, values and symbols of our democracy”. Pandering to the far right? France plans Napoleonland.