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IPE special report May 2018

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French treasury may issue 50-year bonds

FRANCE – The French treasury is consulting on the possibility of issuing a 50-year government bond to meet the demands of investors.

“As a result of growing interest on the part of investors for very long-term placements, Agence France Trésor has asked a number of primary dealers (SVT) to carry out a survey of French and foreign investors, in order to examine the pertinence of issuing a 50-year euro-denominated OAT,” the AFT said.

The move follows a similar consultation by its UK counterpart. Pension funds and insurers have asked the authorities to issue longer-dated bonds as they seek to match their liabilities.

The French agency expects an in-depth analysis of the structural demand for very long-term maturities, taking into account both the long-term prospects and the evolution in the allocation of euro-denominated assets.

“The current level of interest rates justifies issuing a very long-term maturity OAT, provided that the survey points to a real structural demand on the part of investors for this type of product," said AFT chief executive Bertrand de Mazières.

"By exploring the very long end of the yield curve, AFT is adding a new dimension to the development of the euro-denominated bond market,” added deputy CEO Benoit Coeuré.

Institutions involved in the consultation include BNP Paribas, Barclays Capital, Deutsche Bank, HSBC-CCF, SFB, IXIS and JP Morgan.

The agency said: “The result of this survey should be handed in before the end of February 2005 and AFT will inform the market at this moment of whether or not the decision has been taken to proceed with this issuance.”

Elsewhere, the European Investment Bank said its new 15-year issue for E4bn “created a long-dated benchmark segment alongside leading sovereigns”.

“It contributed significantly to diversification of the investor base in Europe, notably among long-dated investors such as insurers and pension funds.”

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