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Christine Lagarde, Minister of the Economy, Industry and Employment, has approved the medium- and long-term borrowing programme (BTAN and OAT) net of buybacks at €188bn for 2010.
French CPI and eurozone HICP index-linked bonds will account for around 10% of medium- and long-term debt issuance. As in previous years, AFT will adjust issuance to match demand and to ensure the liquidity of the bonds.
In 2009, AFT conducted €13.6bn of securities buybacks, with €11bn of debts maturing in 2010 and €2.6bn of debts maturing in 2011. Throughout 2010 and depending on market conditions, AFT will implement buybacks of securities falling due in the following years.
Long and medium-term borrowing in 2010
1. Amounts to be issued
Net issuance of medium and long-term securities will amount to €188bn. As in the past, AFT will be allowed to operate debt buybacks and/or switches, depending on market conditions and financing needs.
Net issuance will include around 10% of inflation-linked bonds, the remaining issuance being distributed between BTANs and OATs.
As in previous years, AFT will adjust issuance to match demand and to ensure the liquidity of the bonds.
2. Benchmark Lines Issuance Policy
AFT will issue in 2010 one new 2-year benchmark, two news 5-year benchmarks and two news 10-year benchmarks. In addition, AFT will examine, in close cooperation with SVTs, the issuance of a new long-term benchmark, possibly a 15-year, and the issuance of a very long-term benchmark, a 40-year or a 50-year benchmark.
All benchmark lines will be tapped to ensure their liquidity by providing a sufficient outstanding.
Regarding inflation-linked lines, AFT will examine the opportunity to issue new bonds, including maturities between 10 and 15-year. In addition, AFT will continue to issue existing linkers, in order to meet investor demand.
3. Auction Schedule and Rules
In August and December, a single auction, of either BTAN or OAT or both, depending on advices from SVT, will take place on the first Thursday of the month. The other months, OAT will be auctioned on the first Thursday of the month, and BTANs on the third Thursday.
As regards the lines to be auctioned, AFT retains, as in previous years, capacity to adjust to final demand as reported by the SVTs and tap non-benchmark lines or tap, at BTAN auctions, OATs with a less-than-5-year remaining maturity.
Index-linked bond auctions will take place every third Thursday of the month, at 11:50 am (Paris time), except in August and December.
4. Average maturity of debt management
The average debt maturity strategy initiated in 2001 remains on hold. The interest rate swap programme will be revived as soon as market conditions are favourable. AFT will inform market participants before resuming swap operations.
2009 Status Report
The 2009 gross medium- and long-term borrowing amounted to €178.6bn in face value, with fixed-rate OATs accounting for €83.6bn, linkers (BTAN€i, OATis and OAT€is) for €12.3bn and BTANs for €82.7bn.
Agence France Trésor
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