The state borrowed the last 314 billion euros, instead of the 215 planned before the crisis. But who lends to France? And how does it go? Here are some answers.
There is no particular excitement associated with issuing debt securities. It’s a very good time, even if it concerns numbers with a lot of zeros …
Strapped in their dark suit and tie, Anthony Requin, the director general of Agence France Trésor, and his deputy Cyril Rousseau supervise, as every Monday, the borrowing operations.
The state has been in deficit for several decades. The hole is widening even more this year, because of the Covid. So you have to borrow heavily. This is the role of Agence France Trésor, on the ninth floor of the Ministry of the Economy in Paris. The latter is also referred to as “Bercy”, from the name of the district where the impressive building is moored, partly planted in the Seine.
Normally, around fifty agents, including around twenty women, work in the Bercy trading room. Covid requires, the workforce on site is reduced. “The auction” will last less than an hour. At 2 p.m., two operators set up in front of their wall of screens. On Monday, issues of short-term securities take place ”,
comments Cyril Rousseau. These are loans that France will repay in three months, six months or a year. The long-term loan auctions (two to fifty years old) take place two Thursdays a month.
Fifteen partner banks
By the way, who is lending to France? We work with fifteen banks, a third of which are French
(BNP, Crédit Agricole, Société Générale, etc.), selected every three years by the State ”,
indicates Cyril Rousseau. They constitute the “primary market”. But these banks are not going to keep all of their debt securities. The latter are in fact negotiable on the stock exchange, at a price that is constantly changing according to supply and demand. Banks will therefore be able to sell these securities to other players on a so-called “secondary” market. Our market has a thousand investors around the world,
calculates Anthony Requin. Pension funds, insurers, foreign central banks that have euro reserves, etc.
Auctioned at a rate of -0.62%
There still has to be demand. To make sure, the agency brought together the fifteen banks on the previous Thursday. This made it possible to refine the amount of the issue. It amounts this Monday between five and six billion euros, of which about half repayable within three months. But why are there short loans and long loans? It depends on market demand,
answers Anthony Requin. A pension fund, which pays pensions, is more interested in maturities between twenty and fifty years. For an insurer, it will be more like five to twenty years. Other investors are looking for the short term.
2:50 p.m .: the auction is closed. The proposals of the banks amount to 22 billion. The State retains only the most interesting, that is to say at the lowest rates. He awards the maximum of the expected range, ie 6.2 billion, at a negative rate of around -0.62%, even more advantageous for France than the previous week. Anthony Requin shows his satisfaction: Investors have confidence in the signing of France.
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