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"I would like to have some savings invested over the long term to provide me with an additional income but I'm worried about inflation eroding their value. I'm interested in inflation-indexed OATs."
The coupon, which is paid annually, is a fixed fraction of the indexed principal; it too is thus protected against inflation. The holder receives a fixed part that is predetermined by the percentage of the rate applied to the principal, and a variable part that is indexation to inflation.
OATi and OAT€i are aimed at all categories of investors wishing to protect the purchasing power of their investments. France is the first country in the euro zone to have issued these. They also offer a means of diversifying a portfolio as their market price is on average less sensitive to interest-rate movements than that of nominal OATs.
Taking a concrete example
The latest coupon paid by the OATi 3% 25 July 2009 On 25 July 2005, the indexation coefficient for this OATi was 1.10984. An investor who owned 10,000 x €1 bonds on 25 July 2005, received a coupon of: 3% x 10,000 x 1.10984 = €332.95. The usual formula is: OATi coupon = 3% x face value x indexation coefficient. If you sell an OAT before its maturity date, you will dispose of it at the market price and, in relation to the acquisition price, realise a capital gain or capital loss in line with market trends.
For further details concerning inflation-indexed OATs (calculating indexation coefficients, rounding rules, calculating accrued interest*, etc.), please refer to the “Understanding indexed OATs” fact sheet on page 23.