France Hires Banks for New May 2042 OAT Syndication

The French government has mandated five major international banks to act as Joint Lead Managers (JLMs) for an upcoming new long 15-year OAT benchmark, due 25 May 2042. The transaction will be launched by syndication in the near future, subject to market conditions. The banks involved are BNP Paribas, Crédit Agricole CIB, HSBC, Morgan Stanley, and Société Générale. This syndication is expected to attract a diverse range of investors, both domestic and international, seeking to participate in the French government's long-term financing needs.



The French government has been actively issuing sovereign bonds, including green bonds, to finance its budget and support its economy. In 2024, the Republic of France successfully issued a 25-year OAT green bond, raising €8 billion with over 470 investors participating. This demonstrates the strong demand for French sovereign debt and the government's commitment to sustainable financing.

The political uncertainty in France, stemming from the far-right's success in the European Parliament election and President Macron's call for a snap legislative election, has impacted the yield and syndication of the new OAT. The French 10-year OAT yield rose to 3.26% on Tuesday, extending a 12bps surge on Monday, and touching fresh highs since November last year. This increase in yield can be attributed to the political uncertainty, as investors seek higher returns to compensate for the perceived increased risk.

The role of the JLMs is crucial in the success of the OAT syndication. They act as intermediaries between the issuer and the investors, managing the syndication process, marketing and distributing the new OAT benchmark, pricing and allocating the securities, and managing risks. Their expertise and networks help ensure the successful completion of the transaction, attracting a broad base of investors and achieving record-breaking issuance amounts.

In conclusion, the French government's decision to hire five major international banks as Joint Lead Managers for the new 15-year OAT benchmark demonstrates its commitment to long-term financing and attracting a diverse range of investors. Despite political uncertainty, the strong demand for French sovereign debt and the expertise of the JLMs are expected to contribute to the success of the syndication.