RTRS:France to issue 170 billion euros of bonds in 2013
(Reuters) - France plans to issue less debt next year, counting on a smaller budget deficit to lower its borrowing needs, while expecting the cost to rise from this year's record lows.
Agence France Tresor, the country's debt management agency, said it would issue 170 billion euros ($219 billion) of BTANs and OATs - medium and long-term bonds - next year, compared with an estimated 178 billion this year, net of buy-backs.
AFT made its forecast after the government unveiled its 2013 budget on Friday in which it forecast the 10-year bond yield would average 2.9 percent in 2013, up from 2.2 percent now.
Despite an unprecedented level of overall debt, France has been borrowing at record-low rates, with a weighted average yield of 1.98 percent on medium and long-term bonds issued since the start of the year.
"We won't be the biggest issuer in the euro zone in 2013," AFT chief Philippe Mills told journalists.
"I think that the three biggest countries in the euro zone (France, Germany and Italy) will issue amounts that are quite similar, but we will probably be the one that issues the least."
France has been treated by investors as part of the euro zone core, almost akin to Germany, while its finances are more reminiscent of debt-strapped periphery economies.
AFT also said the outstanding amount of short-term BTF treasury bills was forecast to be reduced to 10 billion euros by the end of 2012, up from a previous estimate of 7.7 billion.
Mills said the agency had conducted debt buy-backs of 17 billion euros this year, adding "several billion more" were possible year if market conditions were favorable.
He said the government had forecast higher borrowing costs in 2013 than financial markets were expecting, with forward rates lower than its estimates.
"The government has been very cautious in its rates forecast for 2013 and the following years."
AFT said the state's financing requirement would be 171.1 billion euros in 2013, down from 182.8 billion this year. It said the figure included a projected budget deficit of 61.6 billion euros and bond redemptions of 107.9 billion.
Redemptions were projected to rise about 10 billion euros in 2013 from 2012, partially offsetting the positive effect of a 22 billion euro reduction in the budget deficit.
