High-grade deal of the year: Agence France Trésor’s €6 billion 50-year OAT
After a year’s preparation, the French sovereign managed to combine innovation with excellent execution.
|At a glance:
Deal type: 50-year obligation assimilable au trésor
Deal size: €6 billion
Lead managers: Barclays Capital, BNP Paribas, Deutsche Bank, HSBC
Date: February 2005
Agence France Trésor enhanced its reputation for pushing at the frontiers of the sovereign debt sector with its €6 billion 50-year 4% OAT, due 2055. No issuer had previously gone that far down the euro yield curve. This transaction was the first step in the creation of a new segment in the curve and was highly significant given that retirement savings are increasingly being invested in long-dated securities.
“It was something we thought about for a good year before making the decision,” says Bertrand de Mazières, chief executive at Agence France Trésor. “Partly the push came from our primary dealers but also it came from our own ideas of what could be the new areas of investor demand.”
Demographic trends in Europe are expected to increase demand for ultra-long assets from fund managers, pension funds and life insurance companies. This is because an ageing population is associated with more pensioners, longer life expectancy and lower real interest rates; all of which contribute to increased demand for long-term assets.