Crédit Agricole launched its first dollar covered bond on Wednesday, a $1.5bn 144A deal, timing its entry into the US market to come after the finalisation of the obligations à l’habitat framework and the conversion of its covered bond issuer to a société de financement de l’habitat, according to the issuer.

Nadine Fedon, chief executive officer, Crédit Agricole Home Loan SFH, and global head of funding, Crédit Agricole, told The Covered Bond Report that the issuer had been working on the US dollar project for a couple of months.

“The dollar market opened up last year and there have been many issuers that have chosen to go to the US dollar market as well as euros,” she said, “and we thought that, being the biggest home loan lender in France, it was a logical next step to diversify our investor base by going to the States.”

The issuer held a roadshow starting in the week of 21 March, just ahead of the expected approval from France’s Autorité de Contrôle Prudentiel (ACP) on 28 March for Crédit Agricole to issue obligations à l’habitat and convert Crédit Agricole Covered Bonds to Crédit Agricole Home Loan SFH.

“We didn’t want to launch the deal before our bonds could be issued as obligations de financement de l’habitat,” said Fedon. “It would have been more complicated to say that we are issuing a contractual covered bond but will soon be operating under a legal framework.

“We wanted to be able to go to investors and provide them with clarity on what covered bonds they are buying.”

She said that it was this, rather than any concern that investors would not be interested in a contractual covered bond, that explained the timing.

The $1.5bn transaction was structured as a floating rate note and comes after some of this year’s earlier European dollar deals were split into fixed and floating rate tranches.

“We were surprised by the scale of the demand for a floating rate note,” she said, “but given that investors were clearly more focused on FRNs we decided to do one, rather than issue two tranches or just a fixed rated deal.”

Leads Bank of America Merrill Lynch, Barclays Capital, Crédit Agricole and Citi priced the July 2014 issue at 75bp over three month dollar Libor after taking more than $1.8bn of orders for the new issue.

“The funding level is comparable to that for a similar maturity in euros and it was an interesting transaction for us,” said Fedon. “There was no premium to pay for diversification.”

The last comparable deal from the issuer in euros was a Eu2.25bn three year issue in January that was priced at 43bp over mid-swaps.

“We have successfully built up a presence in the US dollar market in senior unsecured format and have now added covered bonds,” added Fedon. “We are interested in being a regular issuer in the US across both formats.”