1.On 22 September 2021, the Council of Ministers adopted the French Budget Bill for 2022. On 12 November 2021, the government tabled an amendment to this Budget Bill . Following this amendment, the total financing requirement will stand at €302.5bn, mainly consisting of €155.1bn to cover the deficit to be financed and €147.9 to redeem medium- and long-term debt maturing in 2022. Absorbing a part of SNCF Réseau debt will also increase the government’s 2022 debt redemptions by €3.1bn.
The financing requirement in 2022 will be met by (i) the medium- and long-term government debt issuance programme, net of buybacks, worth €260.0bn (ii) a €32.1bn drawdown of the Treasury’s account (iii) an increase in outstanding short-term government securities (BTFs) for €5.0bn (iv) €1.9bn of covid debt redemption from la Caisse de la dette publique (v) and other cash resources of €3.5bn, assuming issue premiums net of discounts worth €3.0bn.
3.State debt service is expected to stand at €39.5bn, including €0.8bn in interest charges connected with the partial absorption of SNCF Réseau debt.
4.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 €115.7bn.
5.The detailed medium- and long-term financing programme for 2022 will be released in December 2021.
The 2021 Budget Act was voted by Parliament on 17 December 2020. As indicated in the previous press release about the Indicative State financing programme for 2021, the State financing programme has been adjusted following the debates and amendments during the discussion about the French Budget Bill 2021 (PLF2021) in Parliament.
A first Revised Budget Act LFR1 (in French only) was voted on 19 July 2021.
A second Revised Budget Bill (PLFR2) was presented to the Council of Ministers on 3 November 2021 (see data in the table below).
On the basis of the 2022 Budget Bill, which provides for medium- and long-term borrowing (OATs) of €260.0bn, net of buybacks, an amount identical to 2021 and 2020, Bruno Le Maire, Minister for the Economy, Finance and the Recovery, has approved the indicative State financing programme for 2022.
In 2022, the total financing requirement will stand at €298.9bn, mainly consisting of €155.1bn to cover the deficit to be financed and €144.4bn to redeem medium- and long-term debt maturing in 2022. This financing requirement will be covered by medium- and long-term borrowing (OATs) of €260.0bn net of buybacks, a €33.5bn contribution from the balance of the Treasury Account, €1.9bn in COVID debt redemptions by the Public Debt Fund (CDP) and other cash sources of €3.5bn, assuming issue premiums net of discounts worth €3.0bn.
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 stipulates that bonds linked to French and European inflation indices will account for approximately 10% of net medium- and long-term debt issuance.
AFT may buy back debt in 2022 (BTFs and nominal and index-linked OATs) depending on market conditions.
* As defined in Section 56 of the Initial Budget Act for 2022 enacted on the 30 December 2021
1. New bonds
- AFT will auction one new 3-year benchmark, one new 5/6-year benchmark, two new 10-year benchmarks and one new 15-year benchmark;
- AFT will also examine, together with the primary dealers, the prospect of a syndicated issue of a new 20- to 30-year bond, depending on market conditions;
- AFT will continue to tap its green bonds to meet market demand. These operations will take place up to the limit of eligible green expenditures for 2022, the amount of which will be communicated in January.
- AFT will consider the syndicated launch of a new 30-year OAT indexed to the euro-area consumer price index (OAT€i), depending on market conditions;
- AFT will also examine, together with the primary dealers, the prospect of a syndicated issue of a 10- to 15-year inflation-indexed Green OAT.
More generally, AFT will keep tapping all of the existing nominal and European and French inflation-indexed bonds, depending on demand for them.
2. Auction rules and schedule
An auction of nominal and/or inflation-linked OATs may take place on the first Thursday of the month in December, depending on market conditions and after consultation with primary dealers. During the other months of the year, OATs with maturities of more than 8.5 years will be auctioned on the first Thursday of each month, and OATs maturing in 2 to 8.5 years and inflation-linked OATs will be auctioned on the third Thursday of each 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 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.
For newly created nominal OATs with maturities of 2 years or more, redemption dates will be changed to dates in March or September. For inflation-linked OATs, redemption dates will remain in March and July.
4. 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.
5. 2021 financing programme status report
The gross nominal value of medium- and long-term debt issuance in 2021 stood at €285.1bn, consisting of €261.4bn in fixed rate bonds and €23.6bn in inflation-linked bonds.
In 2021, AFT bought back €19.6bn in debt maturing in 2022 and €5.5bn maturing in 2023.
- In French only - Extrait relatif au programme 117 "Charge de la dette et trésorerie de l'État" (PLF 2020)
- In French only - Extrait relatif au compte de commerce "Gestion de la dette et de la trésorerie de l'État" (PLF 2020)