France

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.

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.

Two issuers joined the primary covered bond pipeline on Tuesday, improving the market outlook. Caisse Francaise de Financement Local (Caffil) and Raiffeisenlandesbank Niederösterreich-Wien AG have both mandated banks for deals, which will be preceded by roadshows

Caisse de Refinancement de l'Habitat (CRH) sold its second Swiss franc covered bond of the year on Tuesday, targeting the long end with 12 year paper. While it was able to fund at a favourable level compared to its curve, the long maturity hampered orders.

Crédit Agricole SCF returned to the covered bond market for the second time this year with its second ever public sector backed deal. The €1bn 10 year transaction priced through the OAT, which was the first time in the history of the French covered bond market.

Despite a UK holiday syndicate bankers are not ruling out deals on Monday, and there are still borrowers eager to execute bonds in run up to summer, they said.

Moody’s downgrade of Commerzbank and Hypothekenbank Frankfurt (Hypfra) will leave Commerzbank’s covered bonds unscathed but push Hypfra’s public sector bonds down to Aa2, analysts said on Wednesday.

Covered bond issuers decided against bringing benchmark bonds on Friday despite a better backdrop, but there are several potential deals in the pipeline and stronger sentiment should encourage issuers looking to come next week, said bankers.

After Moody’s downgraded French mortgage guarantor Crédit Logement from Aa2 to Aa3 this week, SG said on Wednesday that a downgrade below single-A would result in a 20% haircut to the value of the mortgage loan collateral it guarantees.