France

France impressed as it received a record €51bn order book and paid a small new issue premium with its first syndication since the outbreak of the Covid-19 pandemic. The sovereign was joined in the long end of the curve this week by two sub-sovereign borrowers as investor appetite for duration grows, with more supply expected to follow.

Société Générale SFH has issued a second Obligations de Financement de l’Habitat (OFH) deal as a security token using a protocol that can be fully integrated with other blockchains and, for the first time, was settled using the Banque de France’s newly developed digital currency and structured with industry-aligned smart contracts.

The Belgian region of Wallonne took advantage of the growing demand in the long end of the curve to sell its first social bond on Thursday, although it had to pay a chunky new issue premium to do so. Elsewhere, Bpifrance received plenty of demand to print €1.25bn with a 10 year trade.

Rating: Aa3/A+/A+

Axa Bank SCF became the first bank since February to issue a 20 year covered bond — showing investors' growing appetite for risk. It also offered encouragement to eurozone issuers with long term funding needs to return to the market — especially given the strong performance of deals eligible for the ECB's purchase programmes compared with those that are not.

Commerzbank and Crédit Agricole this week showed that banks do not have to pay big premiums for subordinated paper, with investors regaining their appetite for risk during the coronavirus pandemic.

Banks are bounding back into the Kangaroo market. On Wednesday, BNP Paribas jumped in to sell the first syndicated Australian dollar senior non-preferred deal since the start of the Covid-19 crisis, later that day the Bank of Nova Scotia announced plans to join the fray with a mandate for a three year bail-inable deal.

France received its biggest ever order book as it came to the market for a 20 year syndication on Tuesday. SSA bankers say that investors are looking for duration after previously sticking to defensive maturities as the Covid-19 crisis eases.

Two more eurozone sovereigns are set for syndications on Wednesday, with France eyeing up 20 years and Iceland coming for a six year bond.

A pair of French banks visited the five year point of the Kangaroo curve on Tuesday. BPCE raised A$650m of senior preferred paper, while BNP Paribas mandated for a senior non-preferred deal.

This week's funding scorecard looks at the progress French agencies have made in their funding programmes as we approach the end of May.

Covered bond investors wasted little time in placing big orders on Tuesday for the largest ever green deal issued in Swedish kronor — a five year floating rate transaction secured on energy efficient mortgages from Sparebank 1 Boligkreditt (Spabol). At the same time, Credit Mutuel Arkéa issued a long 10 year with blow-out demand, reflecting a material concern that covered bond supply, net of central bank purchases and redemptions, will be deeply negative this year.