Most OATs are fixed-rate issues. The French government can also issue floating-rate OATs indexed to long benchmark rates, and CPI-linked OATs (see below). On April 9, 1996 for the first time, the French Republic issued an OAT whose quarterly coupon is linked to the TEC-10 index, an average yield of OATs with a constant maturity of 10 years.
This issue reflects the modernization of French government variable-rate issues, creating a more simple and transparent benchmark with a structure that is closer to that of existing bonds on international markets. The specifications of the TEC 10 index and the TEC 10 OAT should appeal to a broader range of investors, thereby ensuring the liquidity of this security.
1. Benchmark rate
TEC 10 is a constant maturity rate. It represents the yield-to-maturity rate of a fictitious OAT with a maturity of exactly 10 years. The TEC 10 is derived from the interpolated yield of OATs on the secondary market.
2. Calculation of accrued interest
Pre-set revisable rate: the next coupon is set in advance, this is calculated as for a standard bond (TEC 10).
3. Amounts outstanding
OAT TEC outstanding came to € 21.74 billion on 31 March 2002, breaking down as follows:
OAT TEC 10 October 2006: € 11.89 billion
OAT TEC 10 January 2009: € 9.85 billion
Definition of TEC 10
The Taux de l'Échéance Constante à 10 ans or CNO-TEC 10 represents the yield-to-maturity of a fictitious OAT with a constant maturity of exactly 10 years.
This rate is derived from the linear interpolated current yield of the two OATs whose maturity is under and over 10 years.
Prices are fixed with value at the theoretical delivery-versus-payment date for the relevant market segment, based upon the standards in force on the secondary market, currently d+3 banking days for OATs (Obligations Assimilables du Trésor).
Selection of benchmark OATs
Fixed-rate bullet OAT, with annual interest, (settled) outstandings in excess of EUR 3 billion, and coupons to be detached on 25 January, 25 April, 25 July or 25 October.
Each CNO-TEC index of day d is based upon the prices of MTS France and the EuroMTS markets at 11 a.m.
Calculation and publication frequency: daily.
Publication agent: Agence France Trésor. Every day, at about 3 pm, Agence France Trésor publishes the day's value of the TEC 10 using the main real-time financial information systems (www.aft.gouv.fr, Reuters page <TRESORTEC10>, Bloomberg TRESOR <GO>). The day's value of the TEC 10 is also available on Reuters page <CNOTEC>.
MAJ : 06 April 2005