20 December 2012: Indicative State medium- and long-term borrowing programme for 2013

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Pierre Moscovici, Minister for the Economy and Finance, has approved the indicative financing programme of the French Republic for 2013.

In 2013, the State budget deficit will amount to € 62.3bn, the redemptions of long- and medium-term debt will amount to €106.9bn and the redemptions of other debts will amount to €1.6bn. The State funding requirement will therefore amount to €170.8bn.

This funding requirement will be covered by medium- and long-term borrowing (BTAN & OAT) of €169bn net of buybacks, and the cancellation by the Caisse de la Dette Publique of €4bn of securities. The short-term bills outstanding (BTF) will decrease by €0.3bn.

The funding programme implements the 2013 Budget Law which sets a €62.1bn ceiling to the year-on-year increase of the medium- and long-term negotiable debt.

As in previous years, AFT will adjust issuances to match demand and to ensure the liquidity of the bonds. French CPI and Eurozone HICP index-linked bonds will account for around 10% of medium- and long-term debt issuances.

In 2012, AFT conducted securities buybacks for €23.5bn. This reduced by 18bn€ the redemption of debt maturing in 2013 and started to reduce the redemption of debt maturing in 2014 for an amount of more than €5bn. Throughout 2013 and depending on market conditions, AFT will implement buybacks of securities maturing in the following years.




1. Benchmark Lines Issuance Policy

AFT will issue one new 2-year benchmark, two new 5-year benchmarks and two new 10-year benchmarks. AFT will examine, in close cooperation with SVTs, the issuance of other new long-term benchmarks, in particular on the 30-year maturity, if the demand justifies the introduction of new references.

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; the launch of a new 10-year benchmark on the European inflation (OAT€i) will be examined. In addition, AFT will continue to issue existing linkers, in order to meet investors demand.

2. Introduction of collective action clauses in new bonds

From January 1, 2013, as for all countries of the euro area, the new bonds issued by the State shall be accompanied by collective action clauses (CACs), in accordance with Article 12 of the Treaty establishing the European Stability Mechanism.

As decided at the European level, the liquidity of existing bonds will be provided by the possibility to tap securities without CACs, in the limit of a maximum of 45% of total issuances.

3. Change in the name of the medium term securities and months of repayment

New benchmark securities created on medium-term (maturities of 2 and 5 years) will be now issued under the form of OAT (Obligation Assimilable du Trésor), as it is the case for long-term securities (10 years and more). The specific name of BTAN (Bon du Trésor à intérêts Annuels) for medium-term securities has indeed no more the utility it had originally. Existing BTAN will continue to be tapped in order to maintain their liquidity.

Furthermore, repayment dates of new nominal OATs created, with maturity of 2 years and more, will be set to May or November, instead of the current dates. For linkers, repayment date remains July. Therefore, it will be easier to strip and reconstitute newly issued securities with CACs.

4. Auction Schedule and Rules

In August and December, a single auction of OAT of any maturity, depending on market conditions and advices from SVT, will take place on the first Thursday of the month. The other months, OATs with a maturity of more than 5 years will be auctioned on the first Thursday of the month, and OATs with a maturity of 2 years to 5 years on the third Thursday, at 10.50 am (Paris time).

As regards the lines to be auctioned, AFT retains, as in previous years, the capacity to adjust to final demand as estimated by the SVTs by tapping non-benchmark lines or tapping existing BTANs at OAT auctions with a maturity of 2 years to 5 years.

Inflation-linked bond auctions will take place every third Thursday of the month, at 11:50 am (Paris time), except in August and December.

5. 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. AFT will alert the market before resuming its operations.

6. 2012 Status Report

The 2012 gross medium- and long-term borrowing amounted to €201.5bn in face value, with fixed-rate OATs accounting for €94.9 bn, linkers (OATis, BTANis and OAT€is) for €17.1bn and fixed-rate BTANs for €89.5bn. AFT conducted securities buybacks for € 23.5bn, including €18bn of debt maturing in 2013 and more than €5bn of debt maturing in 2014 to meet its target of €178bn borrowing, net of buybacks.


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