Obligations Assimilables du Trésor indexées sur l'inflation (OATi) - Financial definition
Concise definition of the term Obligations Assimilables du Trésor indexées sur l'inflation
OATi are French long-term government bonds indexed on the French inflation.
Comprehensive definition of the term Obligations Assimilables du Trésor indexées sur l'inflation
Indexed bonds are part of the State's strategy of issuance policy diversification. OATis are regularly auctioned throughout the year, on the first and third Thursday of each month.
OATis are intended for all kind of investors who wish to protect the purchasing power of their investments, improve the backing of their liabilities or diversify the content of their portfolios. They appeal both to the institutional investor - life insurance companies, pension funds, savings banks, investment trusts, etc. - whether resident or non-resident, and to individual savers.
Characteristics
| Face value | 1 EUR |
| Real coupon | Fixed percentage of linked principal, determined on issue and fixed until maturity. |
| Paid coupon | Post-set annual coupon calculated according to the following formula: real coupon x nominal x indexation coefficient. |
| Reference index | Consumer price index (CPI) excluding tobacco for all households residing in mainland France, published every month by the INSEE. |
| Daily inflation reference | Daily reference calculated by linear interpolation according to the following formula: o the reference applicable to the first day of the month m is the CPI for month m-3. For example, the reference applicable to June 1 is the CPI for March. o the reference for any other day of month m is calculated by linear interpolation between the CPI for month m-3 and the CPI for month m-2, according to the following formula. \[ IPC_{v} = IPC_{m-3} + \frac {j_{v}+1}{J_{m}} \cdot ( IPC_{m-2}-IPC_{m-3} ) \] Point on the formula to see its legend |
| Rounding rules | The daily inflation references, including the base index, are rounded to the nearest fifth decimal after truncating up to the sixth decimal. The same rule applies to the indexation coefficient. |
| Base reference | Daily reference used to calculate the change in the price index. |
| Indexation coefficient | CIj = reference of day j / base reference.Same rounding rule as for the daily inflation reference. |
| Publication procedure | The Ministry of the Economy, Finance and Industry calculates and publishes the daily inflation reference and the indexation coefficient through the web site www.aft.gouv.fr and through the major real-time financial information services (Reuters |
| Indexation method | All flows, accrued interest, aggregate interest and principal are paid according to the indexation coefficient. |
| Redemption on maturity | Nominal x indexation coefficient. Should the daily inflation reference on maturity be lower than the base reference, redemption at par is guaranteed. |
| Accrued interest | Real coupon x (number of days passed / exact number of days of the interest period) x nominal x indexation coefficient. |