Compagnie de Financement Foncier priced a Eu1bn 10 year obligations foncières issue in line with guidance yesterday (Monday), which a syndicate official on the deal said was a positive result given heavy recent supply in that maturity, especially from CFF’s fellow French issuers.

Leads Deutsche Bank, DZ Bank, HSBC, Natixis and Société Générale built a book of more than Eu1bn on the basis of guidance of the 190bp over mid-swaps area, and priced a Eu1bn issue at 190bp over.

Cédric Perrier, syndicate official at Natixis, said that the new issue premium amounted to around 20bp, in line with that paid in recent transactions, such as 10 year issues sold by Crédit Agricole and Société Générale last week, but slightly more than the new issue concession on a Eu2bn 10 year deal for Caisse de Refinancement de l’Habitat from last Tuesday (3 January). Crédit Agricole Home Loan SFH sold a Eu1.5bn 10 year obligation à l’habitat issue a day after CRH’s deal, with Société Générale following suit with a Eu1.25bn 10 year deal on Thursday, making that three 10 year French covered bonds in as many days last week.
A syndicate banker away from CFF’s deal also put the new issue premium on CFF’s deal at 20bp, adding that price action on 10 year obligations foncières “is taking its toll on the second wave and less recognised issuers”, citing progressively wider re-offer spreads paid by French issuers in the past week.

RBS analysts called the guidance on CFF’s deal “staggering”.

CFF’s deal was the fifth to come with a 10 year maturity in less than a week, four of which were launched out of France, with a Eu1.75bn transaction for ING Bank also part of the tally. Australia’s ANZ Banking Group sold a 10.5 year yesterday, but entered the market after CFF.

Perrier said that CFF’s deal should be viewed in the context of the heavy long dated supply that preceded it.

“It is a transaction that came after a wave of three French deals plus ING,” he said, “but despite this supply we were able to print a Eu1bn deal in line with initial guidance.

“Taking this into account it is a good achievement.”

Perrier also said CFF’s deal had been executed within the day, which was rare among deals priced so far this year.

“We announced the deal late Friday afternoon without any IoIs or whisper or maturity, and only started collecting IoIs yesterday morning,” he said. “The execution was actually a rather quick process.”

Syndicate officials away from the leads had yesterday said that CFF’s transaction could be complicated because of credit line problems, and Perrier acknowledged this issue.

“With CFF being part of BPCE group, investors have aggregated credit lines for CFF and BPCE and this does play a role,” he said.

BPCE also issues covered bonds, via a Société de Financement de l’Habitat.

CFF’s deal was carried by German and Austrian investors alongside a strong domestic bid, with the former taking 46% and French accounts 42%. Spain and Portugal took 5%, the UK and Ireland 3%, Italy 2%, and others 2%.

Central banks participating under the ECB’s second covered bond purchase programme (CBPP2) took 22% of the bonds, which Perrier said was a larger amount than in other 10 year deals that have come to market this year but still far below the maximum that the Eurosystem has been said to be willing to buy.

Seventy accounts took part in the transaction. Insurance companies and pension funds were allocated 41%, banks 28%, central banks 22%, funds and asset managers 7%, and others 2%.