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French SSAs should frontload ahead of May-hem


With SSA primary market conditions red hot, it would be wise for French public sector borrowers to crack on with their funding ahead of a double whammy of risk events in May.

In addition to the European parliamentary elections, the same month could also see France’s first referendum in 14 years.

Emmanuel Macron, the French president, is looking to let the country vote on major policy decisions to put an end to the debate on reforms that sparked the widespread ‘yellow vest’ protests in the country.

The referendum, which has not been confirmed, could even take place on the same day as the European parliamentary elections on May 26, doubling up the risk for French issuers. 

In a research note, analysts at Societe Generale said if it was “in the shoes” of the Agence France Trésor, the French sovereign debt office, it would “certainly want to come to the market sooner rather than later” for the 30 year syndication that France plans to issues in 2019. 

But with the SSA market in phenomenal shape, it also makes sense for French public sector agencies to frontload their funding.

Investors are putting cash to work in the public sector market in a big way. Deals are flying with record order books and strong performance in the secondary market, despite the low yields and minimal new issue premiums paid.

French agencies have also benefited from the strong conditions. 

Last week, Bpifrance sold its joint largest ever issue. After initially announcing a €500m size for a tap of November 2023s, it ended up printing three times that at €1.5bn with an order book that reached over €2bn.

In the week before that, something similar happened with Caisse d'Amortissement de la Dette Sociale. The agency announced a €500m tap of its October 2023s, but sold €2.5bn with a book of over €3.7bn.

But the market will not remain in such strong shape for the whole year and particularly not for French borrowers if the events in May turn ugly. They should follow a tweaked version of the famous City adage and sell before May and go away. 

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