France eyes more debt buybacks if market conditions remain favourable, its debt agency chief told Reuters as the country keeps borrowing at rates near record lows despite a Fed-related increase and a sovereign rating downgrade. The euro zone's second-largest economy has already issued 80 percent of debt planned for this year, borrowing at a historic low of 1.44 percent on average across all maturities, Ambroise Fayolle said in the interview.
The Agence France Tresor debt agency had bought back 12 billion euros worth of 2014 and 2015 bonds by end-June. It repurchased 23.5 billion euros in the whole of 2012, which in turn allowed it to cut debt issuance plans for 2013. "If market conditions remain favourable in the second half of the year we will be able to proceed with buybacks, as long as we maintain good liquidity for those securities," said Fayolle, who took over as debt agency chief in March.
Despite worries over its stagnating economy, and a debt that will top 94 percent of GDP next year and still be at over 88 percent of output in 2017, France benefits from being a liquid market that offers higher yields than more robust euro zone economies while being seen as less risky than periphery states. "Financing conditions are absolutely exceptional," Fayolle said.
France's government said earlier this year it could not cut its 2013 deficit to 3 percent of national output as planned, pledging to meet this target by 2015 and revising this year's goal to 3.7 percent. However, lower borrowing costs are a welcome relief that will help rein in public spending.
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