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AGENCE FRANCE TRESOR is tasked with managing the government debt and cash positions under the most secure conditions in the interest of the taxpayer.
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Index-linked OATs  

    "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."



A three-fold benefit: the market's liquidity the purchasing power of the investment is protected portfolio diversification Index-linked OATs are real* fixed-rate* bonds, the principal* of which is at par at the time of maturity (always €1), which are protected against French inflation (OATi) or European inflation (OAT€i). How? By index-linking the principal to a daily reference point calculated in relation to an index, viz.: • the French consumer price index* (excluding tobacco) for OATi, • the harmonised price index for the euro zone* (excluding tobacco) for OAT€i

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.