The French government will lift bond issuance next year as the state budget deficit and redemptions rise, the public debt management agency said on Wednesday. The Agence France Tresor said it planned to issue 195 billion euros ($229 billion) of medium and long-term debt next year net of buybacks, up from 185 billion euros this year.
The state deficit to finance is set to rise to 82.9 billion euros under the 2018 budget after 76.5 billion euros this year, revised up from 69.3 billion euros originally in the budget bill for this year. AFT said that bond redemptions were set to rise to 120.1 billion euros next year from 115.2 billion this year.
To finance the increase in this year's deficit, AFT said that the amount of Treasury bills outstanding would be increased by 3.8 billion euros by the end of the year. Meanwhile, the AFT said that it had bought back 17.9 billion euros of bonds this year as of the end of July.
Presenting its 2018 budget, the French government said that it expected the yield on the 10-year benchmark bond to stand at 1.1 percent at the end of the year and rising to 1.85 percent by the end of 2018. The government also said it expected state debt service costs to stand at 41.5 billion euros this year, falling to 41.2 billion euros next year.
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