France: tracking inflation out to 30 years

One of the most impressive sovereign deals of 2002 was France’s e4 billion 30-year bond indexed to eurozone-wide inflation. Although France, like many other issuers, has long experience in issuing domestic inflation bonds, this was only its second eurozone CPI-linked deal. The first, in 2001, was also well received, but at 10 years this was an easier achievement. France’s success in selling such an innovative structure at such a long maturity surprised many in the market, particularly in the light of a projected 15% increase in government debt supply in 2003 over last year’s levels.