What has made the Swiss franc market attractive for Desjardins and how does it fit into your broader funding strategy?
The Swiss franc market is a strategic diversification market for Desjardins. It gives us access to a unique investor base that complements our traditional funding markets. Through a consistent presence and ongoing investor engagement, we have built a strong relationship with Swiss investors over many years. My CFO and I visit Switzerland for a roadshow every November and this year will be our fourth. Maintaining this dialogue helped create the momentum for this transaction.
How did you decide on the size and maturity for this deal and what were you looking to achieve?
The six and a half year maturity was a deliberate choice. It is somewhat longer than our natural ALM sweet spot, but it aligned well with Swiss investor demand and enabled strong execution and investor participation. The timing was also attractive. It was one of the last opportunities to access the Swiss franc market in 2025 and there was deep investor demand. That resulted in our largest single tranche Swiss franc covered bond transaction to date — Sfr335m — and reinforced the importance of the market within our diversified funding strategy.
The transaction was intended not only to expand our investor base but also to strengthen our presence in the Swiss franc covered bond market. It builds on the long-standing support we have received from Swiss investors and reinforces Desjardins’ position as a frequent issuer.
What makes Swiss investors an important source of diversification for Desjardins?
Swiss investors show strong interest both in the strength of Desjardins’ credit and in the resilience of the Canadian covered bond framework. Many are dedicated Swiss franc buyers with specific investment mandates, so the market provides true investor diversification rather than simply another funding currency.
Our approach has been based on a long-term strategy rather than opportunistic issuance. We want to be a frequent issuer, build lasting relationships with investors and maintain access to an investor base we may not reach through our core funding markets. People want to see you come through the cycle, not only access the market when it is good for you.
How has that diversification strategy evolved as Desjardins’ funding programme has grown?
When we started this strategy in 2022, none of our funding came from markets outside Canada, the US and euros, while the Canadian industry was at around 15%-20%. The message we heard from investors was that they liked the Desjardins credit, but we were not a frequent issuer. They wanted us to revisit how we executed, sometimes issue smaller amounts and come back more regularly.
Today, around 20% of our funding comes from outside those three core markets. Switzerland was the first market we focused on. We have also accessed the Sterling and Australian dollar market and issued a private placement covered bond in Norwegian kroner.
The euro remains our reference market, but we diversify according to the tenor and pricing available. Sometimes we will accept paying more than the euro market for the sake of diversification. There is a price for diversification, but maintaining access to these markets is valuable, particularly when core markets become crowded.
What are your main funding priorities from here, and which other markets is Desjardins monitoring?
The priority is to maintain a disciplined and diversified funding programme while preserving strong liquidity metrics. We continue to adopt a prudent approach to liquidity management given the unsettled macroeconomic environment.
We remain very constructive on covered bonds, which continue to demonstrate their value as a stable and resilient funding source. We also welcome regulatory initiatives that enhance international recognition of covered bond frameworks.
Australia is one market we will be considering again. We have seen the impact of the regulatory changes there on pricing and the success of recent Canadian issuance. We are waiting for the right timing to access that market again and I hope we can do so by the end of this year.