Progress in AFL’s initiatives towards 0% risk-weighting for its debt securities to support the financing of French local governments

The draft Simplification Bill, which is due to be examined by Parliament following the municipal elections in France, includes in Article 26 an amendment to the framework governing the guarantee provided by local governments to AFL’s creditors. This legislative proposal represents a major milestone for the local government bank, which is continuing its efforts to ultimately secure 0% risk-weighting for its debt securities.

The proposal is the culmination of an initiative launched by AFL several years ago in conjunction with the relevant authorities, aimed at improving the financing conditions offered to local governments. It was in this context that the ACPR reached its decision on 21 June 2024 to risk-weight French local government debt at 0%, although AFL was unable to benefit from this as an issuer of debt securities. To finalise this process, it would make sense for AFL, as the local government bank, to be assigned a risk-weighting aligned with that of its shareholders and borrowers.

Read the press release ✒️