Sylvain de Forges, who created European inflation-linked government bonds during his time as chief executive of Agence France Trésor, is trying to do the same for the corporate market. The question now is, will other non-government borrowers follow suit?
Veolia Environnement, where de Forges is now director of financial operations, opened the books on its €600 million 10-year bond indexed to European inflation on June 6 and closed them two days later. The bond yields 1.79% plus European inflation, 65 basis points over the 10-year French treasury bond.
Of all corporates, utilities are natural inflation issuers. Globally, for example, wages account for about 40% of Veolia Environnement's charges. Its remuneration and the price revision clauses in its contracts reflect this indirect link to general price evolution....
