French debt revamp will lead to fewer T-bill issues

PARIS, May 22 (Reuters) France will issue fewer T-bills as a result of its plan to revamp its debt management programme to try and bring its outstanding debt to within the European Union limit of 60 percent of gross domestic product.

Benoit Coeure, the deputy director general of the French Treasury, Agence France Tresor (ATF), told Reuters in an interview late on Friday that the creation of a new very short-term Treasury bill would mean there would be far fewer outstanding bills at the end of this year than was foreseen in the debt issuance programme announced at the end of last year.

''The modification of Treasury management will lead to fewer issues of BTF's (T-bills) of 3-months, 6-months and one year,'' Coeure said.

''Outstanding volume of T-bills at the end of December this year will certainly be significantly lower to that of 31 December 2005, even though the programme of public financing published in December predicted it would be stable.'' Finance Minister Thierry Breton announced steps on Friday that he said would help France reduce its outstanding debt to 64.6 percent of gross domestic product by the end of this year and to under 60 percent by 2010.

One of the measures was the creation of a new short-term T-bill that would be based upon those used by the U.S. Treasury Department for its liquidity management operations.

Asked how long the new bills would be, Coeure said: ''The characteristics of this new bill must be decided with the primary dealers.'' But he noted that the maturity of the U.S. equivalent was between one and four weeks.

He said AFT was looking for something that would be flexible that banks and companies could use in their treasury management. Coeure said the new bill would not be a substitute for existing instruments.

''It will not be a substitute for existing Treasury bonds and T-bills. It will not affect the use of existing T-bills,'' he said.

''It's a new instrument that will complete the range of BTFs (T-bills).'' REUTERS PV RK1321