French Auction Fails To Sell Max Projected As Bid-To-Cover Plunges

Tyler Durden's picture

French 10Y bond spreads had widened almost 50% (from 100bps to 149bps) in the last week of trading ahead of this critical auction and the EURUSD is over 200pips lower. The auction results are in and it is not a total disaster but the bid-to-cover dropped significantly to its lowest since October 2010 and they missed their maximum target.


*FRANCE SELLS EUR4.02 BLN 3.25% 2021 BONDS; YLD 3.29%

*FRANCE SELLS EUR690 MLN 4.25% 2023 BONDS; YLD 3.5%

*FRANCE SELLS EUR1.088 BLN 4.75% 2035 BONDS; YLD 3.96%

*FRANCE SELLS EUR2.165 BLN 4.5% 2041 BONDS; YLD 3.97%




EURUSD is leaking a little lower and 10Y French spreads are widening modestly but the initial reaction is unimpressive for now.

French Auction results:

French 10Y auction Bid-to-Cover:

French 10Y Bond spreads:

EURUSD is moving down to new lows of the day now:


Charts: Bloomberg

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Ghordius's picture

"it is not a total disaster" got to repeat this often enoughit is not a total disaster, it is not a total disaster, it is not a total disaster

well, the yields are not that impressive, too

Quintus's picture

Not a total disaster but EUR/USD sure isn't liking it.

Ghordius's picture

sure, but since we are in a currency war you just have to remember that they flow back and forth

there is still an incredible amount of MMP USD cash deployed in the EUR system chasing yields, etc. etc.

as I was writing below, one day we will discuss here central bank reserves, then you know we are in the next phase

Michael's picture

A little nudge for the Santorum plunge;

Creepy Rick Santorum Takes Dead Offspring Home to Show Children

Non Passaran's picture

I never click on URLs, especially YouTube (mostly crap) if the comment does not contain some textual indication of the vid's value. In this case your comment surprisingly contains such indication and it is telling me the vid must be absolute garbage.

Second, if anyone wants to read about Santorum's inconvenient truth, today's exposes him as a beta version of Newt Ging-getting-rich.

Long Ron Paul, long PMs.

theMAXILOPEZpsycho's picture

France must be ring fenced at all costs. I work for an EU council and can tell you the damage a downgrade by those predetory rating agencies would lead to unmitigated disaster. Greece, Portugal et al, were caused by mismanagement and lack of regualtion of the greedy capitalists and fat cats manipulating markets whereever they may choose. France however is the poster boy for a large government, a population with a proper sence of entitlement. It therefore must be saved. We're looking at tighter capial controls right now, I can tell you; as once the predetory capitalists have had their way they move onto the next victim...Well not on my watch!

ZeroPower's picture

I dont work for a bloated gov agency and can tell you a downgrade of FRA (which is coming, have you seen FRA corporate names {IG} and any sov spreads??) is long overdue and will only bring things back to a certain reality.

Oracle of Kypseli's picture

You confuse greedy capitalists with kleptocrats enabled by whore politicians and corrupt regulators.

Capitalism includes failure and bankruptcy instead of bailouts.

The inevitable will happen and it will all come down and only the guillotine will be the great equalizer.

papaswamp's picture

Preditory! First and formost...capitalism doesn't exist in the world of TBTF and bailouts. So there is no such thing as capitalism going on.

Second...the continued bailing out of govts and banks are done on the backs of the people paying taxes...and in most cases their children and grand children. THis mentality literally makes taxpayers the debt slaves of those being bailed out. Debt being poured on top of new debt in hopes that the economy will miraculously explode higher with everyone able to eventually pay down the debt is sheer madness and a pipe dream. The weight of the debt and low interest rates robs the taxpayer of any wealth potential now or future.

If capitalism had been allowed to work and bad banks and debt default we would already be in a recovery with debt CLEARED. The left over assests would be picked up by the healthy systems. Clearing of debt is the ONLY way to bring prosperity back. THis continued piling of debt at the expense of the people dooms everyone to a long slow decline.

Non Passaran's picture

My message to your employer: FUCK YOU!

If anyone is manipulating it is the scum from the EU, ECB and their cleptocratic clique. Fuck them all and if this theft continues, may citizens have mercy on their bodies.

Cast Iron Skillet's picture

The ratings agencies really fell down on their job when they failed to downgrade Greece, Ireland, etc. in a timely manner (years ago). Had they done their jobs, they would have downgraded those countries much, much sooner, which may have forced the countries to cut spending sooner, saving them from the current catastrophic situation.

France deserves a downgrade now exactly because "France however is the poster boy for a large government, a population with a proper sence of entitlement." - they have spent their way into a huge hole.

tabasco71's picture

And the poster boy for FrAAnce... DSK.

Proper sense of entitlement.. what the deuce does that even mean in these times - a population that considers they should continue to be able to borrow from the future at the expense of their proles?

That's all well and good when its your own workforce you're exploiting, but now sovereigns are trying to leverage off the efforts of other societies in order to bankroll their internal debt the story is starting to wear thin.

All countries will have to take their medicine.

Reptil's picture

Eeehmm and french banks are not capitalists.. how?
The "market" is reacting like this because there's a push for "mark to market" of the debt.
If the governments wouldn't have "protected" the banks, in the early stages of the crisis (2007-2008) the financial system would've had a chance. The bad apples would've been thrown out and there would've been clarity, and settlement. No one had the balls, however.

Ordinairy taxpayers have to suffer (austerity) because of supposedly responsible financial managers have and are still gaming the system, because no one is stopping them.

Except for "the markets". It's their JOB to rate, and hedge. Of course they're predators. What did you think? Everything just comes for free just because you wear a fucking tie? The Hedge funds didn't run up this debt. Corrupt governments in bed with equally corrupt bankers did.
There HAS to be settlement. "Protecting" the banks is not capitalism, nor is it socialism (though socialists all over europe are very confused now that the bailouts turn out to be money thrown towards those same banks, without any further effect), it's FASCISM. And now, now there's some time between the financial crisis, the first round of bailouts, and the present austerity, so many have lost the thread that binds these as cause and effect. It's amazing what propaganda can do.
THIS CRISIS HAS BEEN A SOLVENCY CRISIS FROM THE START, NOT A LIQUIDITY CRISIS, AND HAS BEEN ENGINEERED TO TRANSFER WEALTH FROM PUBLIC ACCOUNTS TO THOSE OF PRIVATE INSTITUTIONS, THROUGH BAILOUTS OF UNSALVAGABLE FINANCIAL PRIVATE CORPORATIONS. Exactly like "TARP" in the USA was nothing but a transfer. We're now following the USA over the edge of the cliff, and we will kill the motor of our economy, the middle class, if this continues.

The EU council are a bunch of idiots, for allowing this to take place in the first place. It was one big corrupt mess and everyone, except a few kept their mouth shut.

yeah you guys "won" that fight against the whistleblowers, you ignored them, at first and then threw them out... but they were right.



your "solution" to this situation is equally corrupt and stupid: instead of crisis management and tightening of controls, the job for which you were hired, even more undemocratic backroomdeals and fingerpointing is coming from Brussels: the "Lisbon Treaty", hailed by your peers as a political accomplishment is nothing but the REJECTED "European Constitution". Rejected because we knew it was a POS.
still the politicians went ahead, without reading it, and now it includes provisions to kill citizens in case of turmoil and revolution. This is duly noted.

And now, now the house of cards is falling apart, now you have the gaul to come here and say french banks must be saved, by repackaging it as "saving the french people" from greedy capitalists?

Europe is still a great idea, and still there is the possibillity to salvage it. But then, there MUST be accountabillity and more democratic feedback loops, because you burocrats obviously are not capable of running the show on your own.



tabasco71's picture

Of course Europe is important:



EU $15tn (20%)

US $15tn (20%)

PRC $10tn (14%)


GDP Nominal

EU $18tn (26%)

US $15tn (21%)

PRC $7tn (10%)


zero intelligence's picture

While there are unquestionably greedy capitalists and market manipulators, the reason that France is being kicked around is because you have an 85% debt/GDP ratio, a deficit on the order of 6% of GDP, and you keep making promises to shovel out hundreds of billions of euros of taxpayer monies to bail out the bankers on their failed investments in sovereign bonds of Greece, Italy, Portugal, and other such losers.

The Reich's picture

Less than 4% for an almost bankrupt country isn't that bad me thinks.

hugovanderbubble's picture

Austrian Spreads +160

-Deutsche Bank Raising Capital

-COntagious effect risk hyper on

-Italian banks toasted

-Spain Real Estate Fraud

Barry Freed's picture

The real question is, can Euros be safely used as toilet paper with that shiny metallic stuff on them?

Ghordius's picture

no, they stick to your bum - according to a dear relative of mine the old sterling can be softened and is better for this (more linen), he should have known, he used a stash of nazi counterfeit sterlings in Africa and was delighted - delighted!

but remember, in some future we will discuss here about central bank reserves

The Limerick King's picture



The poor Frenchie auction was weak

The Euro is looking quite bleak

With trillions required

And debt buyers tired

These fuckers are all "up the creek!"

Oh regional Indian's picture


"up the greek" perhaps? It fits the way things are going.


hugovanderbubble's picture



CDS- Trigger Greek Bonds

Portuguese debt junk

Italy cannot pay back debt (principal + interests ) with austerity measures.  Italian people are blind. They must fight - Revolution¡

Oh regional Indian's picture

Hugo, Credit Events ( I prefer to call them Debt Events) have been happening. AIG and 2008 was a huge debt event.....

No one is going to fight until it hits the table. And if .gov becomes the only supplier, there goes that fight too.

This is going to take smarts. Everywhere Poliezi has the bigger truncheon.


BandGap's picture

"These fuckers are gonna get Greeked"

Talk about death by a thousand cuts.  France is like an elephant taking spear after spear from the local tribe.

El Gordo's picture

The paper ones are not very absorbent and are rough, but they are cheaper than corn cobs.

ArgentoFisico's picture

Mmmmm... Better to use the dollars. Softer

Manthong's picture

Reuters:   “French costs rise but demand solid at debt sale”

Is that opposed to liquid like diarrhea or gaseous like flatulent?


littleguy's picture

Seriously, when is the S&P downgrade happening?

It's well overdue.

hugovanderbubble's picture

tomorrow with market closed

monday GAP DOWN

Quintus's picture

I think it's been cancelled.  All that noise and diplomatically unprecedented fingerpointing at the UK a while ago was clearly the public manifestation of French indignation that their AAA rating was under threat.  Behind the scenes, I imagine vast political effort was simultanously being expended to stop S&P doing anything.

Since the public noise has now ceased and the French politicians are back to their usual smug selves, I can only imagine that the covert pressure has been successful and S&P have backed down.

Ghordius's picture

well, at least we are not at the stage where EuroBanks use one set of rating agencies and the USbanks use another

but yes, the French gov is good at covert pressure and soft removals of enemies

bpom's picture

Maybe the Yanks agreed not to downgrade _____ if _____ would agree to sanctions against Iran.

Ghordius's picture

you have a sick, sick imperialistic mindset

congrats, you are recruited

RobotTrader's picture


Sovereign Debt Fears grip the makets.


Dump gold, oil, equities, etc. and buy U.S. Treasuries and Muni-bonds.


This is what Mohammed "Rubber Lips" El-Erian describes as "The New Normal".

The Limerick King's picture



Robot is losing his mind

A better Troll you'll never find

If you want some trouble

Just buy the bond bubble

Then quickly lube-up your behind.

LooseLee's picture

First halfway 'intelligent' thing robotard has suggested in many, many months. Let the deflationary wave crash so we can start the inflationary tsunami! Bring all asset classes down to afordable levels so the average Joe can get in and ride the way to profits in the PMs, Energy, and Miners!

hugovanderbubble's picture


Mark to Market, period

GeneMarchbanks's picture

What's that? It sounds dangerous.

hugovanderbubble's picture

No more taxpayers till banks doesnt recognise mistakes.

BANKS must suffer and reset,


Ghordius's picture

it is dangerous, it instantly kills unicorns, fairies and banks

it's like pushing thousands of Corzines out of the window, who would want that?

hugovanderbubble's picture

Time to crash Ghordius,

Euro will be toilet paper sir, change ur pic¡


Ghordius's picture

eventually, all fiat returns to the intrinsic value of zero

eventually, all humans return to dust

on a long enough timeline, the survival rate for everyone drops to zero

still, I'm quite sure the EUR will live longer than you or me (though I think? hope? fear? I'll be an EUR millionaire)

the real intrinsic value of the EUR is to restrict/forbid monetary fights between members of the EuroZone

you know what? I endorse this policy

hugovanderbubble's picture

the problem is USD is not safe neither,

just a matter of time of GLOBAL FX collapse.

GeneMarchbanks's picture

Do not dare. Now prepare for a lecture from RoboTarder about insatiable demand for "Gorilla Paper"

hugovanderbubble's picture

Robo is a nice guy,

just needs his meds:)

Non Passaran's picture

Yeah, right...
And you "know" that how?

zero intelligence's picture

On a long enough timeline, gold is the same as it ever was.