French Budget Bill 2025
2025
-
The French Budget Bill for 2025 was presented today to the Council of Ministers. The total financing requirement will stand at €306.7bn, down €12.7bn compared to the 2024 updated financing requirement, mainly consisting of (i) €135.6bn to cover the budgetary deficit to be financed, down €31.0bn compared to the updated 2024 deficit, and (ii) €174.8bn to redeem medium- and long-term debt maturing in 2025, up €19.7bn compared to 2024.
-
The financing requirement in 2025 will be met by (i) the medium- and long-term government debt issuance programme, net of buybacks, worth €300bn, (ii) €5.2bn of Covid debt redemption from the Caisse de la dette publique, (iii) and other cash resources of €3bn. In addition, the outstanding short-term government securities (BTFs) will decrease by €1.5bn.
-
State debt service is expected to stand at €54.9bn.
-
The net year-on-year increase in the nominal value of negotiable State debt with maturities of one year or more will be capped at €127.3bn.
-
The detailed medium- and long-term financing programme for 2025 will be released in December 2024.
2024
-
For 2024, issuance of medium- and long-term debt, net of buybacks, remains unchanged at €285.0bn.
-
The deficit to be financed in 2024 has been revised upwards to €166.6 bn, compared to the amount of €146.9bn provided for in the 2024 initial Budget Act promulgated in December 2023.
-
“Other cash resources” are projected at -€7.4bn, mainly as a result of discounts at issuance, compared to €0.5bn in the 2024 initial Budget Act.
-
Outstanding BTFs will increase by €35.3bn, against €5.2bn in the 2024 initial Budget Act.
-
Since the beginning of 2024, the weighted average yield of medium- and long-term debt securities issued stands at 2.92%, compared to 3.03% in 2023.
-
State debt service is revised downwards to €50.9bn, versus €52.2bn in the 2024 initial Budget Act.
(*) The presented financing table includes the effect of the amendments that the Government intends to submit to Parliament during the parliamentary debates. Without these amendments, borrowing requirements/sources would stand at €313.2 billion, the deficit to be financed would amount to €142.1 billion and the net change in outstanding short-term government securities would be €5.0 billion.
State financing programme for 2025
On 19th December 2024, Antoine Armand, Minister for the Economy, Finance and Industry, has approved the indicative State financing programme for 2025.
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 also 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 2025 (BTFs and nominal and inflation-linked OATs) depending on market conditions.
The funding programme for 2025 provides for medium- and long-term issues net of buybacks of €300.0 billion. The funding requirement may be adjusted, if necessary, depending on the 2025 Budget Bill.
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 two new 10-year benchmarks via auction.
AFT will examine, together with the primary dealers, the prospect of a syndicated issue of a new 15 to 20-year benchmark, depending on market conditions.
AFT will examine, together with the primary dealers, the prospect, depending on demand and up to the limit of eligible green expenditures, of a syndicated tap of the 25 June 2049 green OAT.
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 consider, depending on market demand, the opportunity of issuing by syndication a long-term European inflation-linked bond.
More generally:
AFT will keep tapping all of the existing nominal and European and French inflation-linked bonds, depending on demand for them.
AFT will also keep tapping its green bonds according to market demand. All of these issues will be carried out within the limit of eligible green expenditure for 2024, the amount of which will be communicated later on.
In addition, AFT announces today that it is launching a consultation procedure with primary dealers with a view to updating the green OAT framework in the first half of 2025.
Finally, like in 2024, a repo facility will be created, to be managed by the Caisse de la dette publique (CDP). This tool will allow to mobilise cash up to €20bn through short term repurchase agreements. This facility will be announced through a dedicated press release.
2. Methods and timing of auctions
Depending on market conditions and after consultation with primary dealers, an auction of nominal OATs and/or an auction of linked OATs may take place on the first Thursday of December. 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.
As an exception, in January, auctions of OATs with maturities of over 8.5 years will be held on the second Thursday, and auctions of OATs with maturities of less than 8.5 years and indexed OATs will be held on the fourth Thursday.
Auctions of nominal bonds will be held at 10.50 am (Paris time), and auctions of inflation-linked bonds at 11.50 am (Paris time). BTFs will be auctioned every Monday at 2.50 pm (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.
4. 2024 financing programme status report
The gross nominal value of medium- and long-term debt issuance in 2024 stood at €339.8bn, consisting of €310.49.4bn in fixed-rate bonds and €29.4bn in inflation-linked bonds.
In 2024, AFT bought back €25.0bn of debt maturing in 2025 and € 29.8bn in debt maturing in 2026.