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Best Euro Issuer - Caisse Française de Financement Local

By GlobalCapital
17 Sep 2020

Caisse Française de Financement Local (Caffil), the covered bond issuer of the SFIL Group, is strongly established as the leading public sector covered bond issuer, with more than €50bn of outstanding bonds, including 22 benchmarks. In particular, it dominates the long-maturity segment, with 60% of its issuance in maturities of 10 year or longer.

1671It is now on its way to a similar status in the green and social bond categories, and these achievements have been recognised by the market with this year’s award for Best Euro Issuer.

The local government and export financing agency’s approach to the market rests on constant dialogue with investors, of which well over 500 have participated in its benchmark transactions since its inception in 2013. 


It undertakes regular roadshows to present its credit to investors, holding meetings with about 170 different investors in 33 countries during 2019, for instance, but the conversations are very much a two-way street, says Ralf Berninger, head of investor relations and sustainability at SFIL Group. “Listening to our investor base is very important for us,” he explains. “We always try not just to present our credit story, but also to listen carefully to the feedback we are receiving.”

SFIL Group is a somewhat unique public development bank, financing both French local governments and refinancing export finance loans, with the majority of its funding coming through the covered bonds issued by Caffil. These activities have taken on renewed importance amid the Covid crisis. 

“The covered bond market is key for us to finance public sector investments in France,” says Sami Gotrane, head of treasury and financial markets, SFIL. “In the current context, this activity is more important than ever.”

The issuer, which had sold its inaugural social bond in February 2019, returned in April this year with the first Covid-19 related covered bond, which aimed at directly and indirectly funding sectors affected by the pandemic. 

It issued a €1bn 0.01% May 2025 bond at 31bp over OATs and 22bp over swaps, which was the tightest covered bond spread since the start of the Covid crisis. The deal was exceptionally well received, with investors placing orders for €4.5bn of bonds — at issuance, the largest book for a covered bond in 2020 — and with 130 lines in the book. 

It set up the social bond framework in 2018 to finance the loans it makes to French public hospitals, which make up about 11% of its lending, and used the framework again with the Covid-19 bond in April, amid expectations that hospitals will need to make big investments to manage the pandemic and to cope in a similar future scenario.

It also has a green bond framework that it first used in November 2019 to fund loans to French local authorities at all administrative levels, for green investments. Given that the layers of local government in France are responsible for more than four-fifths of public green and social investments, the green bond framework allows it to play a leading role in financing investments in transport, water and sanitation, climate change adaptation, waste management, energy efficiency and renewable energy. 

“We are proud to have established Caffil as one of the leading issuers of green and social covered bonds over the past year,” says Olivier Eudes, head of market activities at SFIL. “Looking ahead, developing issuance in the ESG space will remain a key priority.” 

Away from its dedicated ESG issues, Caffil always plans regular euro benchmark issuance, and has printed two conventional benchmarks already this year. The first, a €750m 20 year that it issued in February, was priced at 5bp over mid-swaps, the tightest spread seen on a French covered bond of that maturity in a decade. The latest, a €1bn 10 year that it issued in June, was priced at 2bp over OATs.

“This has been a very busy period for us, with three covered bond benchmark transaction in the first half of the year,” says Gonzague Veillas, head of funding and treasury at SFIL. “In addition, we are regularly proposing private placements to adapt to the needs of our investor base.”

By GlobalCapital
17 Sep 2020