CADES info N°27 (march 2010)

Patrice Ract Madoux
Président de la CADES

EDITORIAL

In 2009, CADES(Caisse d’Amortissement de la Dette Sociale), the state agency charged with Funding France’s social security debt, reached once again the mission which was defined by the French Parliament, assuming €27 billion new social debt.  Social Security Financing Act (SSFA) for 2009 endowed CADES with an additional income, CSG levy of 0.2% (Contribution Sociale Généralisée), resulting to 2009 total revenues of €8 billion. In line with its annual target, CADESamortized €5.2 billion making total debt amortized to December 31, 2009of €42.7 billion. With total debt assumed of€134.6 billion, the residual year end deficit was €91.9 billion.

Year 2009 was an active and very successful one for CADES. A total €35.7 billion was raised, the highest annual amount carried out in one year, of which€25.8 billion were mid- and long-term issues. They included €8 billion of Euro-bonds,€7.6 billion of taps of existing bonds,€5.56 billion of US dollar denominated bonds ($7.75 billion) and €1.5 billion other currency bonds. Other issues were a €0.9 billion 10-yearinflation-linked bond and €2.16 billion of private placements (various currencies).

This success confirms CADESas one of the top-ranked bond European Sovereign issuers on the international markets.

In 2010, the funding programme should reach€15 billion and will aim to continue to attract a diversified investor break down and geographical distribution.

 After much debate in the French Parliament on the necessity of raising social taxes to transfer debt to CADESand prevent an extension of CADES’ life span in accordance with 2005 organic law, a key decision was made by the French government in December 2009, confirming that it would neither raise taxes nor transfer debt to CADESthis year. In addition, in order to finance social security debt in the short-term, the 2010 Social Security Finance Act increased the overdraft ceiling for ACOSS (Agence Centrale des Organismes de Sécurité Sociale) to €65 bn for 2010.

During a debt conference held on 28th January, it was confirmed that the terms and conditions of social debt and its Funding will be discussed in spring by a newly created parliamentary commission including the Public Accounts Minister.