French urge Treasury to issue bond in francs

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The Independent Online
FRENCH and other securities houses are trying to persuade the Treasury to take up their proposals to issue a French franc eurobond, which could be as large as Fr10bn ( pounds 1.25bn), market sources said.

There were rumours that the issue, part of the Government's plans announced in September to finance the foreign exchange reserves, could come next week. But some bond market sources said this was unlikely because it would conflict with a French government issue on Thursday.

'Every French and foreign bank has made proposals to the UK since it borrowed in marks,' one bond syndicate manager said.

Bankers said the British authorities and the banks would not go ahead with an issue without the blessing of the French Finance Ministry.

Borrowing a large amount in French franc bonds would be a first for the Government and would also reinforce the recent successful growth of the franc bond market.

Britain made a DM5.5bn ( pounds 2.33bn) eurobond issue last week as part of a currency borrowing programme that will amount to the equivalent of ecu10bn ( pounds 8.1bn).

Any British decision to issue a big French franc eurobond in the coming weeks will be be as much political as economic, bankers working in the franc market said.

'It has to be seen in the light of the Government's attempts to ratify the Maastricht treaty and to show to its EC partners some commitment to economic and monetary convergence,' a banker at a Paris foreign securities house said.

The French government would probably relish the idea of a British issue in francs, which would confirm that the franc is part of the hard core of mark-linked European Monetary System currencies, one banker said.