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Auvergne-Rhône-Alpes, the first local authority to take on ten-year debt at a negative rate

2021-01-20T12:52:27.502Z

The Auvergne-Rhône-Alpes region announced on Wednesday that it had raised 20 million euros over ten years, at a rate of -0.005%, becoming, according to it, the first French community to issue a long-term loan at a negative rate. These securities were acquired by an “ institutional investor ” not identified in the press release distributed by the region. Auvergne-Rhône-Alpes had already issued a lo



The Auvergne-Rhône-Alpes region announced on Wednesday that it had raised 20 million euros over ten years, at a rate of -0.005%, becoming, according to it, the first French community to issue a long-term loan at a negative rate.

These securities were acquired by an “

institutional investor

” not identified in the press release distributed by the region.

Auvergne-Rhône-Alpes had already issued a loan with a negative interest rate in 2019, but it was on a much shorter maturity of 18 months.

Read also: Why does the debt weigh on the following generations?

A negative interest rate implies that the issuer will have repaid less money when the loan matures than it has borrowed.

Due to the abundance of liquidity made available by central banks, many large developed countries have been able to finance themselves at negative rates in recent years.

The region chaired by Laurent Wauquiez (LR) can do the same thanks to its strong debt reduction capacity, attested by the “

AA

” rating (the third best possible) granted by the rating agency Standard & Poor's.

As evidenced by its intrinsic “

aa +

” rating, Auvergne-Rhône-Alpes could have an even better rating if it were not restricted by a provision prohibiting a local authority from receiving a rating higher than that of the State (France is rated "

AA

" by S&P).

Source: lefigaro

All business articles on 2021-01-20

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