France

BPCE has returned to the covered bond market for the second time this year to issue a long dated five year. The transaction was priced with a negligible new issue premium and was broadly distributed to high quality accounts. Though clearly a successful trade, it lacked the sparkle of other higher yielding transactions.

France’s Axa Bank has returned to the market after a five months with a €500m seven year Obligation Foncière (OF). Though the transaction is backed by Belgian residential mortgages, it is structured under French law and, while it offers a decent premium against French OATs, the spread to Belgian OLOs is unattractive.

Crédit Agricole and Austria’s Hypo Noe Gruppe Bank launched seven year public sector backed benchmarks on Monday, benefiting from strong domestic support amid an explosion of issuance across the capital markets.

Three European borrowers mandated covered bond deals on Monday, taking advantage of what could end up being only a brief funding window in the wake of the European Central Bank’s announcement last week that it would support peripheral sovereign debt markets.

Covered bond issuance is on hold while the European Central Bank’s meeting in Frankfurt commands all attention. ECB president Mario Draghi is expected to provide details of a sovereign bond purchase programme and peripheral sovereign spreads have already tightened in expectation. But analysts said investors fearing a disappointing programme could switch to into covered bonds — with Cédulas the most likely to benefit from such a shift.

Crédit Agricole gave an investor presentation for its new Obligations Foncières (OF) programme in Paris on Wednesday, ahead of what could be the first covered bond from a French issuer since late March. French spreads have stopped grinding tighter in the secondary market, but some names still trade flat or even through OATs.

The French Ministry of Economy and Finance released a press release on Saturday evening saying that it would guarantee the debt of Caisse Centrale du Credit Immobilier de France (3CIF) and its subsidiary CIF Euromortgage, subject to approval from the European Union and the French Parliament.

The French government has been forced to guarantee the debt of Credit Immobilier de France after it failed to find a buyer for the mortgage provider.

Crédit Agricole CIB has been mandated to conduct a roadshow for a deal from Crédit Agricole Public Sector SCF’s new €10bn Obligations Foncières (OF) programme. Standard and Poor’s said the issuer is likely to bring a €1bn deal in September.

SSA and corporate markets were busy on Tuesday, keeping the primary covered bond quiet. But issuance should improve this week as investors filter back from holiday, said bankers, though they warned that as spreads have tightened a long way in a short time the market may widen after the initial flurry of deals.

Moody’s cut CIF Euromortgage’s covered bonds from triple-A to Aa1 on Tuesday, after lowering the sponsor bank’s senior and short term debt ratings. The Credit Immobilier de France (CIF) group has not yet found a buyer after starting a sale process in June, and though state support is highly likely it remains locked out of the capital market with redemptions approaching.

This week’s two covered bond deals have helped increased activity in secondary markets, traders told The Cover. There has been selling pressure in the senior unsecured but this has only translated to more mixed flow in covered bonds.