Euro

Caisse Francaise de Financement Local plans to follow its successfully priced €1bn seven year debut with another benchmark this year.

Caisse Francaise de Financement Local (Caffil) is set to price its debut €1bn seven year Obligation Foncière inside price guidance, after being helped by an improving market backdrop in Europe.

Caisse Francaise de Financement Local(Caffil) mandated banks for its debut Obligations Foncières on Monday afternoon, following a stable market opening. Despite speculation that it planned to issue a 10 year deal, it has opted for a seven year tenor.

Gabriele Minotti, head of funding at Credito Emiliano, spoke to The Cover about the bank’s recent covered bond deal, the roadshow and the focus of investors’ questions .

For too long now issuers have taken investors for granted. But ever since Fed chairman Ben Bernanke warned that he might turn off the printing presses, there’s been a marked shift in the balance of power between buyers and sellers. Even the normally bomb-proof covered bond market is beginning to feel the effects.

Credito Emiliano attracted a great reception for its first covered bond in two years. The deal’s success, in marked difference to last week’s less than stellar slew of primary deals, reflected the attractive premium, the issuer’s marketing efforts and, most importantly, stable market conditions.

Several issuers could launch deals this week but after recent sovereign bond market volatility and a lacklustre reception to last week’s deals, the reopening trade will need to be from the right name at the right spread, said bankers.

Münchener Hypothekenbank opened books with guidance on its €500m July 2028 at 15bp-17bp over mid-swaps on Thursday through BNP Paribas, BayernLB, DZ Bank, LBBW, Nord/LB and WGZ Bank. The fact that the deal was priced at the wide end of guidance, relied on lead orders and was barely sold outside Germany suggested a lacklustre reception.

Caisse de Refinancement de l’Habitat returned to the market on Thursday for the first time since March, with a fairly priced re-opening of its €1bn January 2025 through joint leads BNP Paribas, LBBW, Natixis and Société Générale. The transaction was the only one this week that was genuinely oversubscribed. By setting price talk at an attractive initial level guidance could be tightened without losing an order.

After recent volatility this week’s syndications were not straightforward. This was most conspicuously illustrated by Crédit Mutuel Arkéa, which opened books on Thursday for a €700m July 2023. The deal competed head to head with French peer, Caisse de Refinancement de l’Habitat, which tapped investors in the 12 year. After failing to get enough traction, Arkéa was forced to reduce the issuance size to €500m and set the spread at the wide end of guidance.

The primary market sprang back to life on Thursday as two issuers launched benchmarks and a third tapped in benchmark size. But after recent volatility the syndications were not straightforward and there was a lot of price sensitivity in the books. The curious decision to supply at the long end made them even more of a challenge and the fact that two just scraped by, with one being downsized, suggested issuers have been slow to acknowledge the change in market conditions.

Caisse Francaise de Financement Local is lining up its first public sector covered bond issue and plans to raise at least €2bn this year, according to marketing documents seen by The Cover. Meanwhile, La Banque Postale, also owned by the French state, has mandated joint leads for a roadshow.