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Michel Sapin, Minister of Finance and Public Accounts, has approved the indicative financing programme of the French Republic for 2015.
In 2015, the State budget deficit will amount to €74.4bn, the redemptions of medium- and long-term debt will amount to €116.5bn (after €37.6bn of buybacks, in 2013 and 2014, of bonds maturing in 2015), the redemptions of other debts will amount to €0.1bn and other funding requirements will amount to €1.3bn. The State funding requirement will therefore amount to €192.3bn.
This funding requirement will be covered by medium- and long-term borrowing (BTAN & OAT) of €187bn net of buybacks, the cancellation of €4bn of securities and €1.3bn of other financing sources.The short-term bills outstanding (BTF) will be stable.
The funding programme implements the 2015 Budget Law which sets a €72.9bn ceiling to the year-on-year increase of the medium- and long-term negotiable debt.
As in previous years, Agence France Trésor will adjust its issuances to meet the demand and ensure a liquid market for its securities. The borrowing programme calls for bonds linked to French inflation, combined with bonds linked to European inflation, to total approximately 10% of net medium- and long-term debt issuance.
Depending on market conditions, AFT could buy back debt in 2015.
1. Benchmark issues
AFT will issue one new benchmark maturing in February 2018, two new 5-year benchmarks and two new 10-year benchmarks. AFT will also examine the prospects for issuing a new 15-to-20-year benchmark, in coordination with the primary dealers (SVTs).
All benchmark bonds will be tapped so that outstanding amounts ensure a sufficiently liquid market.
AFT will determine whether the time is right for the issuance of a new 10-year benchmark bond linked to the French inflation index (OATi). Its redemption date will be set to 1st of March. AFT will also continue to tap existing inflation-linked bonds.
2. Auction rules and schedule
In August and December, a single auction of nominal or inflation-linked OAT of any maturity, depending on market conditions and advices from SVTs, will take place on the first Thursday of the month. As for auctions taking place in the other months, OATs with a maturity equal to or of more than 7 years will be auctioned on the first Thursday of the month and OATs with a maturity of 2 years to 7 years on the third Thursday, at 10.50 am (Paris time). Inflation-linked bond auctions will take place every third Thursday of the month, at 11:50 am (Paris time), except in August and December.
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.
3. Average maturity of debt management
The average debt maturity reduction 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.
4. 2014 status report
The gross face value of medium- and long-term debt issuance in 2014 stood at €203.1bn, consisting of €185.4bn in fixed-rate bonds (OATs and BTANs) and €17.7bn in inflation-linked bonds (OATis and OAT€is). The proportion of securities issued with collective action clauses (CACs) stood at 70.8% of the total face value of debt issued.
AFT bought back €30.6bn in debt, including €27.7bn in securities maturing in 2015.
Agence France Trésor
Tân Le Quang
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