1. 1 A simple mission, A complex communication November 2005

2. 2 Introduction CADES is a public agency that was established in 1996 to amortize the French social security debt. Its mission was then significantly modified in 1998, 2000, 2002 and 2004. CADES carried out an ambitious issue program in 2004 (41 billion) and in 2005 (35 billion). Communication is a key factor and shows various aspects.

3. 3 Outline 1.A brief description of CADESp.4 2.The various aspects of our communicationp.11 3.Problematic and contradictionsp.14 4.Choices of CADESp.17 Appendicesp.20

4. 4 -I - CADES: Brief description

5. 5 CADES: a simple mechanism An agency created in 1996 by the French State to amortize the debt generated by the French social security program and ease reform of the system. At low cost to French taxpayers, thanks to its lean structure and use of efficient financial instruments. A simple mechanism designed to amortize the social security debt: CADES borrows in the financial markets. Cash flows to investors are secured through CRDS, a tax entirely dedicated to CADES. CADES and CRDS will disappear at a fixed date.

6. 6 CADES: recognized credibility of a quasi–sovereign risk Legal status: Etablissement Public Administratif… … with a commitment from the State to investors: Solvency and liquidity guarantee Strict management control (Cour des Comptes, external audits) The highest ratings: Long term: Aaa/AAA/AAA (Moodys, S&P, Fitch Ratings) Short term: P-1 / A-1+ / F1+ (Moodys, S&P, Fitch Ratings) 0% risk weighting for solvency ratio and Zone A central government status Liquidity on the secondary market: listings on local exchanges, electronic platforms

7. 7 CADES: optimal management Implementation of an asset/liability management model to optimize cost / volatility trade-off Use of adapted and diversified financial instruments: index-linked bonds, private placement, bonds denominated in foreign currencies Systematic hedging of foreign exchange risk Significant reduction in counterparty credit risks through weekly margin calls

8. 8 1996: Assumption that Social Security will be back to equilibrium in 1997: Creation of CADES and CDRS until 2009: take over of 46 billion in debt 1998: Assumption that Social Security will be back to equilibrium in 1998: Take over of 13 billion in new debt; final life time postponed to 2014 2000: 1st Modification by law of the base of CRDS calculation 2002: 2nd Modification by law of the base of CRDS calculation 2004: Assumption that Social Security will be back to equilibrium in 2007: Take over of 50 billion in new debt; the end date of 2014 is eliminated - CADES will continue to exist until the debt is fully extinguished. - Should CADES receive some new debt after 2006, the government will have to decide accurate measures to maintain its final maturity. Key reforms along CADES life

9. 9 Positioning of CADES issue program Expected funding requirements for sovereign and quasi-sovereign issuers in 2005 (In billions) Source: CSFB estimates, Euro Issuance Outlook, July 29, 2004 (i) BTP only (ii) World Bank. Equivalent to USD18 bn – Exchange rate applied: US$/uro: 1.2 141 130 111 52 50 40 35 30 20 15 12 10

10. CADES has now repaid nominal of 28.4 billion Total CRDS receipt (i) Capital amortized (est.)28.4 Interest paid (est.)14.6 43 Voted debt110.4 Estimated net liability position 72.4 (1) (2) (1) - (2) Source: CADES (i) included Euro 0.5 Billion for the sale of real estate assets ( billions) As at november 12, 2005

11. 11 The various aspects of our communication - II - The various aspects of our communication

12. 12 Which targets ? Investors: - institutional, retail - domestic, international Rating agencies Authorities: ministries in charge of supervision Parliament: political power and citizen representatives Press

13. 13 Which reasons ? Regulation: information to investors under the supervision of the market authorities Marketing: - to extend the investor base - to lower the cost of funding Lobbying: to influence political decisions

14. 14 - Problematic and contradictions - III - Problematic and contradictions

15. 15 Our investor base International, institutional investors: central banks, life insurances, mutual funds, pension funds… Hedge funds? International, domestic retail ?

16. 16 Beauty contest or Prudence ? Toward Investors: CADES shows no risk as we are in a stable political environment under rational supervision; Toward Supervisors: CADES reimbursement capacity is volatile, funding level is sensitive; Toward Press: both risks

17. 17 - IV - Our choices

18. 18 Means of communication Road shows: - one to one - meetings, conferences Website Newsletter Press releases, Press contacts Advertisement Board meetings, Parliament committees, State audit service Basic assumption: we dont target domestic retail investors

19. 19 The rôle of the communication agency CADES has no team dedicated to communication: Need for outsourcing A specific choice of action due to the scope of activity: - Interest rates instruments for institutional investors - limited number of competitors among AAA issuers world International capabilities: investors lists, acurate press contacts, local logistic Need to be able to react to news with political consequences

20. 20 - -Appendices

21. 21 An active communication program Web: www.cades.fr Contact: christophe.frankel@cades.fr Bloomberg: CADES Reuters: CADESMTS01 CADESMTS02 CADES/T/U/V CADES01-04