PARIS: France will issue 187 billion euros in medium and long term debt next year net of buybacks, the AFT public debt management agency said on Thursday, trimming its target by one billion euros from an initial estimate as France narrows its public deficit.
Issuance will rise from 173 billion euros ($213 billion) this year because of a spike in redemptions next year to a record 116.5 billion euros as a wave of bonds issued during the financial crisis come due.
Agence France Tresor said short-term debt issuance would remain stable next year.
France is borrowing at record low interest rates as ECB easing expectations drove euro zone government bond yields lower across the board.
"Financing conditions today are exceptional," AFT chief Ambroise Fayolle said, noting that France had borrowed at an average 1.31 percent rate on debt of more than one year in 2014, compared with pre-crisis average of 4.15 percent.
AFT bought back 30.6 billion euros in debt in 2014, including 27.7 billion euros maturing in 2015. Fayolle said the amount of buybacks had been "historically high" to take advantage of low borrowing rates.
The AFT has responded to demand for longer maturities offering higher yields by issuing twice as much 15-year-debt in 2014 than the previous year, with an amount of 34.5 billion euros this year.
Fayolle said he expected growing demand for longer maturities to continue next year, adding that the debt agency was ready to adapt to that and was looking into adding a new 15 or 20-year benchmark.
He said there would be two new five-year and two new ten-year bonds in 2015. The maximum maturity of medium-term bonds will be increased to seven years from five years now.
The amount of debt held by non-residents was largely stable at 64.2 percent at the end of the second quarter from 65.1 at the end of 2013, he said.
Servicing the debt will cost France 44.3 billion euros next year, 1 billion more than in 2014, on expectations that benchmark 10-year bonds would yield 1.8 percent on average.
Fayolle said the agency felt no impact from Fitch downgrade's of France's credit rating last week.
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