15 December 2016: Indicative State financing programme for 2017

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Michel Sapin, Minister for the Economy and Finance, has approved the indicative State financing programme for 2017.

In 2017, the fiscal deficit is forecast to reach €69.3bn. €115.2bn of medium- and long-term debt will fall due for redemption (after buybacks of €28.4bn in 2015 and 2016 of securities maturing in 2017), while other cash requirements are expected to total €0.9bn. The government borrowing requirement for 2017 is therefore forecast to reach €185.4bn.

This funding requirement will be covered by medium- and long-term borrowing (OATs) of €185bn net of buybacks, and by a total net amount of €0.4bn from other financing sources. Short-term debt outstanding (BTFs) will remain stable.

The financing programme is part of the 2017 French Budget Act which caps the net year-on-year increase in medium- and long-term negotiable debt at €72.2bn.

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

AFT may buy back debt in 2017 (BTFs, nominal and index-linked BTANs and OATs) depending on market conditions.

Finally, in 2017 AFT will issue a sovereign green bond depending on market conditions.

Indicative State financing programme for 2017



1. Benchmark issues

AFT will issue one new benchmark maturing in February 2020, one or two new 5-year benchmarks and two new 10-year benchmarks. AFT will also examine the prospects for a syndicated issue of a 30-year bond in close consultation with the primary dealers (SVTs) depending on market conditions.

AFT will issue a syndicated, long-maturity green benchmark bond (OAT) depending on market conditions.

AFT will issue a 10-year benchmark indexed to French inflation (OATi). Unless there is evidence of high demand in 2017, the creation of a new 10-year benchmark indexed to euro area inflation (OAT€i) is not planned before 2018.

All benchmarks will be tapped to guarantee sufficient market liquidity.

2. Auction rules and Schedule

An auction of nominal or inflation-linked OATs of any maturity may take place on the first Thursday of the month in August and December depending on market conditions and after consultation with primary dealers. During the other months of the year, OATs with a maturity of 7 years or more will be auctioned on the first Thursday of the month, and OATs with a maturity of 2-7 years on the third Thursday of the 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 schedule.

Regarding the securities to be auctioned, as in previous years, AFT reserves the right to adapt its issuances by adjusting the composition of benchmark bonds and off-the-run bonds in response to demand from investors as estimated by the primary dealers. Based on advice from primary dealers, it may also decide to tap non-benchmark BTFs.

3. Managing average debt maturity

The strategy to reduce the average maturity of negotiable government debt initiated in 2001 has been put on hold. The interest rate swap programme will resume if and when market conditions allow. AFT will inform the market before resuming the programme.

4. 2016 status report

The gross nominal value of medium- and long-term debt issuance in 2016 stood at €214.3bn, consisting of €193.8bn in fixed-rate bonds (OATs and BTANs) and €20.5bn in inflation-linked bonds (OATi and OAT€i).

AFT bought back €20.2bn in debt maturing in 2017 and €7.1bn maturing in 2018.

At the end of 2016, the short-term debt (BTFs) outstanding will stand at €133.9bn, a reduction of 18.7bn compared to end-2015.

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