270 billion euros: this is the record amount that the French state will borrow in 2023

270 billion euros: this is the record amount that the French state will borrow in 2023

This is a goal that France does not want to exceed: 270 billion euros. This is the amount that the Agency France Tresor (AFT), the body responsible for placing the country’s debt on financial markets, intends to borrow in the medium and long term in 2023. A record.

In 2022, AFT, which completed this year’s planned debt issuance in early December, will borrow €260 billion, to which will be added €26.2 billion used to buy back existing debt. of the state financing program for 2023. If this remains below the target for next year, it is nevertheless slightly more than what the agency planned for in September, on the sidelines of the state budget presentation. Thanks to this advance obtained in 2023, the French state’s financing needs for the next year are less than expected. AFT also aims to reduce the use of its short-term features (BTF).

ECB rate hike: French debt is growing slowly but surely

stable level compared to 2022.

If the amount is 10 billion higher compared to 2022 but also in 2021, it is because the country can no longer withdraw as much as before from its precautionary treasury formed in 2020, at the beginning of the Covid-19 episode. So it must be compensated by an increase in the loan. However, the financing needs are almost the same.

In absolute terms, it’s a record. But compared to the size of the French GDP, This is a stable level compared to 2022. Accurate Cyril Russo, Managing Director of AFT last September. Thus, these 270 billion should correspond to 9.8% of French GDP in 2023, as in 2022, while it was 11.3% in 2020. More “ of the 2023 financing program, which he confirmed on Wednesday. In an environment of so much uncertainty, being a stabilizer is valuable for the issuer and for the markets.”He justified it at a press conference.

a An environment full of uncertainty

No new green debt issuance is planned, but AFT plans to create at least one new debt for 10 years linked to inflation. This type of debt, which accounts for 10% of France’s emissions each year, has seen its cost rise in 2022 as inflation rises, which reached 6.2% in November over one year in France, and 10% in the eurozone. With inflation accelerating, The year 2022 saw us entering a price cycle for the first time in a decade.he had referred to Cyril Rousseau three months earlier, already emphasizing A An environment full of uncertainty and volatility.

On average, France borrowed 1.03% in 2022, while the rates were negative in 2020 (-0.30%) and 2021 (-0.28%). A 10-year fixed-rate loan, the benchmark, averaged 1.5% this year. In the bond market, where investors trade debt securities, that rate is 2.26% on Wednesday around 12:30 p.m. On January 1, it was still hovering around 0.2% after being negative for much of last year.

More price hikes to come

Since July, the ECB has raised interest rates three times, the last two of them by 75 basis points. A fourth tightening of monetary policy is expected in December. It may be less aggressive than the previous two cases, according to the Governor of the Bank of France, François Villeroi de Gallau. In fact, he thought so at the ECB meeting “From December 15th, we must complete the first half, normalization” Monetary policy after several years of exceptionally low rates, close to zero or even negative since 2016. “We will be discussing about Christine Lagarde (note: ECB President) and I think the right course of action is to raise interest rates to around 2%, which is a more natural rate given previous levels.”he said during a broadcast on LCI on Dec. 4. Currently, the main rate is 1.5%. Thus, François Villeroy de Gallo is in favor of raising interest rates by 0.50 percentage points at the end of the next meeting in December.

(with AFP)