07 December 2022: Indicative State financing programme for 2023

On the basis of the 2023 Budget Bill, which provides for medium- and long-term borrowing (OATs) of €270.0bn, net of buybacks, Bruno Le Maire, Minister for the Economy, Finance, Industrial and Digital Sovereignty, has approved the indicative State financing programme for 2023.

In 2023, based on the draft of the Budget Bill submitted to the National Assembly on 26 September updated to reflect debt buybacks, the State's forecast financing requirement will stand at €298.4bn, mainly due to a budget deficit of €158.5bn and €149.4bn of medium- and long-term debt maturing in 2023. This financing requirement will be covered by medium- and long-term (OATs) borrowing of €270.0bn net of buybacks, a €3.3bn variation in short-term debt (BTFs) outstanding, a €18.0bn contribution from the balance of the Treasury account, €6.6bn of Covid debt redemption from the Caisse de la dette publique and other cash sources for €0.5bn.

As in previous years, Agence France Trésor (AFT) will adjust its debt issuance programme to meet demand and guarantee a liquid market for its securities. The programme stipulates that bonds linked to French and European inflation indices will account for approximately 10% of net medium- and long-term debt issuance.

In addition, AFT may buy back debt in 2023 (BTFs and nominal and linked-linked OATs) depending on market conditions.

*As submitted to the National Assembly on 26 September 2022, updated with medium and long term debt buybacks carried out in 2022

1. Creation of new securities
In the nominal bond segment, AFT will issue one new 3-year benchmark, one new 5/6-year benchmark and, not earlier than in the second quarter, two new 10-year benchmarks via auction. AFT will also examine, together with the primary dealers, the prospect of a syndicated issue of a new 30-year benchmark, depending on market conditions.

In the inflation-linked bond segment, AFT will auction a new 10-year European inflation-linked bond (OAT€i). AFT will also consider, depending on market demand, the opportunity of issuing by syndication a 15 to 20-year French inflation-linked bond (OATi).
AFT will also keep tapping its three green bonds according to market demand. All of these issues will be carried out within the limit of eligible green expenditures for 2023, the amount of which will be communicated next January.

More generally, AFT will keep tapping all of the existing nominal and European and French inflation-linked bonds, depending on demand for them.

2. Methods and timing of auctions

An auction of nominal OATs and/or an auction of linked OATs may take place on the first Thursday of December, depending on market conditions and after consultation with primary dealers. During the other months, OATs with maturities of more than 8.5 years will be auctioned on the first Thursday of the month and OATs with a maturity of 2 to 8.5 years and inflation-linked OATs will be auctioned on the third Thursday of each month.

Auctions of nominal bonds will be held at 10.50am (Paris time), and auctions of inflation-linked bonds at 11.50am (Paris time). BTFs will be auctioned every Monday at 2.50pm (Paris time).

AFT will inform the market of any changes to the auction schedule.

Regarding the securities to be auctioned, as in previous years, AFT reserves the right to adapt its issuances by tapping non-benchmark issues in response to demand from investors as estimated by the primary dealers.
3. New collective action clauses in new bonds

Effective the first day of the second month following the ratification by all parties of the Agreement Amending the European Stability Mechanism Treaty, new State-issued bonds will include “single-limb” collective action clauses.

For newly created nominal OATs with maturities of 2 years or more, redemption dates will be changed to dates in March or September. For inflation-linked OATs, redemption dates will remain in March and July.

 4. Managing average debt maturity

The implementation of the reduction of the average maturity of the debt initiated in 2001 remains suspended. The interest rate swap programme will be reactivated if market conditions warrant.

5. 2022 financing programme status report

The gross nominal value of medium- and long-term debt issuance in 2022 stood at €286.2bn, consisting of €260.8bn in fixed-rate bonds and €25.4bn in inflation-linked bonds.

In 2022, AFT bought back €26.2bn of debt maturing in 2023.

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