Until last year the French treasury, which has some E812 billion in outstanding debt, was not allowed to issue in any other currency, partly because of a disastrous bond issue after World War I when the franc steadily depreciated against the dollar and the costs spiralled. The path is now clear for a non-euro debt issue and de Mazières is considering his options.
The decision is likely to be driven by investor demand, and de Mazières said investors are still undecided about whether they want such an issue. Any foreign currency debt would also have to fit with the agency's funding philosophy. For example, it has made a commitment to only issue liquid bonds so de Mazières has almost ruled out a one-off foreign currency issue. Rather, it would have to be a new benchmark issue.
The advent of the euro, however, has removed much of the need to diversify its investor base. Before the launch of the euro de Mazières readily accepts that most of its investors were based in France, whereas now over 40% of its debt is held outside the country.
