France keeps 2021 bond issuance plans steady despite deficit pressure

PARIS- The French government will maintain its bond issuance as planned next year even if the fiscal deficit is revised upwards in the budget bill, the Agence France Tresor public debt management agency said on Wednesday.

AFT said in an update on its borrowing plans that it intended to issue 260 billion euros ($315 billion) of medium and long-term bonds next year, net of buybacks.

That leaves issuance stable from this year's record 260 billion euros and was unchanged from AFT's previous plans for next year.

The government is due next week to update its deficit estimate in the 2020 budget bill to take into account extra spending on the coronavirus crisis announced since it first published the bill in September.

AFT said in a statement that a bigger deficit could be covered by "an increase in the outstanding amount of short-term securities and the use of other cash sources".

As things stand now, it said it expected to increase the amount of Treasury bills outstanding next year by 18.8 billion euros from 2020 levels and expected to count on 3.5 billion in other cash resources on hand.

Among the new bonds to be issued next year, in addition to the standard 3, 5 and 10-year benchmarks, AFT would consider issuing new 30 and 50-year bonds by syndication depending on market conditions.

It said it would also issue by syndication a second green bond with a maturity around 20 years while also continuing to tap its first green bond.

Among inflation-linked bonds, AFT said it would issue a new 10-year bond linked to euro area inflation and would consider another 10-year linked to French inflation.

It also flagged that it could follow in the footsteps of other European governments with a new repo facility, which could mobilise up to 20 billion euros through short-term repurchase agreements.




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