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| Benoît Cœuré |
IT SEEMS SO obvious now. Inflation-linked issues have become such an established part of the European bond market, and such a neat way for funds to match assets and liabilities, that investors now need a good reason not to use them, rather than a good reason to buy them. Even in a period of low inflation, new types of investors are coming to this asset class with every issue. The level of demand has prompted Japan, a country that famously has no inflation, to join the rush to issue linkers.
But in 1998, when France's state funding body, Agence France Trésor (AFT), became the first institution to issue euro-denominated inflation-linked bonds, it felt it was taking something of a leap into the unknown.
Benoît Cœuré, deputy chief executive at Agence France Trésor (pictured above), explains. "It may seem easy now but it was not an easy decision to make – it was not easy to guess," he says. "Pricing an inflation-linked bond requires a notion of inflation over the long term."
Luckily, that is the sort of challenge that Cœuré relishes, being an economist and civil servant by training.