France

Dexia Municipal Agency broke a lull in the primary market with a Eu1bn eight year obligations foncières issue yesterday (Wednesday) that demonstrated the viability of issuance in spite of the fragile market conditions, with two issuers today (Thursday) following suit and another announcing a mandate.

Dexia Municipal Agency is today (Wednesday) bookbuilding for an eight year obligations foncières issue that is the first benchmark covered bond of the week, and Dexia’s first since the European Commission approved the group’s restructuring plan earlier this month.

Two new French covered bond programmes are being planned by existing issuers, with one turning to obligations foncières for the first time and the other looking to issue obligations à l’habitat.

Standard & Poor’s has affirmed the AAA ratings of a further four covered bond programmes under its new rating methodology. The programmes are those of DekaBank Deutsche Girozentrale, NRW.Bank, DnB Nor Boligkreditt, and BNP Paribas Public Sector Société de Crédit Foncier.

Crédit Mutuel-CIC priced the third benchmark covered bond of the week yesterday (Thursday) afternoon, but with the European Union’s statement in support of Greece having failed to calm nerves, the two day burst of activity could prove to have marked the eye of the storm, rather than its end.

Crédit Mutuel-CIC this (Thursday) morning launched its second benchmark in just over a month, marketing a seven year transaction that follows a five year deal sold on 7 January.

Caisse de Refinancement de l’Habitat sold a Eu1.2bn 10 year covered bond yesterday (Wednesday), taking advantage of a back-up in yields prompted by an easing of the Greek crisis.

Standard & Poor’s has revised the outlook on Dexia Crédit Local’s A rating from stable to negative because it expects the institution’s funding costs to rise over the next two years as it will no longer benefit from a government guarantee for any new debt issues.

Optimism that the nadir of the Greek crisis has passed helped Caisse de Refinancement de l’Habitat and Eurohypo launch successful benchmark covered bonds this (Wednesday) morning.

Benchmark supply is expected to be thin on the ground this week, even though some institutions have concluded preparations for covered bond issuance. But while blackouts and an unpredictable sovereign market might stymie euro supply, bankers have not ruled out shorter dated issuance from core jurisdictions.

Standard & Poor’s yesterday (Thursday) affirmed its AAA ratings of Dexia Municipal Agency’s obligations foncières and WestLB’s public sector Pfandbriefe. However, WestLB’s Pfandbriefe would lose their triple-A rating if the issuer were downgraded by one notch.

Société Générale SCF yesterday (Wednesday) priced the tightest 12 year benchmark covered bond since the onset of the financial crisis, a transaction that a lead syndicate official said showed good demand for strong names and jurisdictions despite volatility in parts of the sovereign market.