Since 2001, AFT has managed the average residual maturity of debt. The requirement for each issue to be liquid, the growing demand from investors for very long maturities and control over the refi risk naturally lead to relatively long average debt maturities. In a normal situation whereby the yield curve is clearly steep, giving higher yields on the longer maturities and lower but more volatile yields on the shorter ones, reducing the average maturity should help reduce the cost of debt servicing over the longer term on a like-for-like basis. In return, the cost of debt servicing will vary more.
By aiming to reduce the average maturity of existing debt, the aim is to strike a balance between lower interest payments and greater variability in the cost of debt servicing. This type of reduction should be achieved gradually over at least one economic cycle as interest rates vary depending on the economic climate.
At end-2014, this strategy was temporarily suspended. The interest-rate swaps programme may nevertheless be revived if market conditions allow and once the market has been informed.