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OAT€IS AND BTAN€IS

 PRINT

Characteristics of OAT€is


 The State issued an OAT indexed on the inflation (OATi ) on September 15, 1998 for the first time. In October 2001, the State issued an OAT indexed on the inflation but this time, indexed on the eurozone price index (OAT€I). These issues were part of the reduced cost government security management scheme and intended to create a new category of assets among the government securities, as well as providing a benchmark for this kind of euro-denominated instruments.

Indexed bonds are part of the State’s strategy of issuance policy diversification. They take advantage of the commitment to regularity and liquidity regarding all French government securities. OATis are regularly auctioned throughout the year, on the first and third Thursday of each month.

OATis are intended for all kind of investors who wish to protect the purchasing power of their investments, improve the backing of their liabilities or diversify the content of their portfolios. They appeal both to the institutional investor - life insurance companies, pension funds, savings banks, investment trusts, etc. - whether resident or non-resident, and to individual savers.

General characteristics of OAT€is
Par EUR 1
Real coupon fixed percentage of linked principal, determined on issue and fixed until maturity.
Paid coupon post-set annual coupon calculated according to the following formula: real coupon x nominal x indexation coefficient.
Reference index harmonized index of consumer prices (HICP) excluding tobacco for eurozone, published every month by Eurostat.
Daily inflation reference Daily reference calculated by linear interpolation according to the following formula:
- the reference applicable to the first day of the month m is the HICP for month m-3. For example, the reference applicable to June 1 is the HICP for March.
- the reference for any other day of month m is calculated by linear interpolation between the HICP for month m-3 and the HICP for month m-2, according to the following formula. 

Illust:3, 8.4 kb, 298x65

Rounding rules The daily inflation references, including the base index, are rounded to the nearest fifth decimal after truncating up to the sixth decimal. The same rule applies to the indexation coefficient.
Basic reference Daily reference used to calculate the change in the price index.
Indexation coefficient CIj = reference of day j / basic reference.Same rounding rule as for the daily inflation reference.
Publication procedure The Ministry of the Economy, Finance and Industry calculates and publishes the daily inflation reference and the indexation coefficient through the web site www.aft.gouv.fr and through the major real-time financial information services (Reuters <TRESOR> and Bloomberg TRESOR <GO> pages).
Indexation method All flows, accrued interest, aggregate interest and principal are paid according to the indexation coefficient.
Redemption on maturity Nominal x indexation coefficient. Should the daily inflation reference on maturity be lower than the basic reference, redemption at par is guaranteed.
Accrued interest Real coupon x (number of days passed / exact number of days of the interest period) x nominal x indexation coefficient.

 


Updated on 06 Mar 07

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