Crédit Mutuel-CIC Home Loan SFH on Tuesday priced a Eu1.25bn 12 year issue at 172bp over mid-swaps that bucked a trend of wider re-offer spreads and smaller deal sizes in a succession of French long dated supply.

The deal was the fifth French benchmark to be priced in one week, a process started by a Eu2bn 10 year deal for Caisse de Refinancement de l’Habitat and followed by a Eu1.5bn 10 year Crédit Agricole issue, then a Eu1.25bn 10 year Société Générale transaction, and a Eu1bn 10 year Compagnie de Financement Foncier deal. Their respective re-offer spreads were 160bp over, 165bp, 170bp, and 190bp.

Armin Peter, head of covered bond business and syndicate at UBS, one of the leads on CM-CIC’s deal, said that the transaction interrupted the widening trend by coming at 172bp over after CFF’s re-offer spread of 190bp. The guidance on CM-CIC’s deal had been set at the 175bp over area. HSBC, JP Morgan and Société Générale were lead managers alongside UBS.

A syndicate official away from the leads noted that CM-CIC priced a 12 year benchmark – this time a Eu1bn issue – on exactly the same date in 2011. It came with a 4.125% coupon and was priced at 85bp over mid-swaps.

Christian Ander, head of funding, Crédit Mutuel-CIC Group, said that the issuer was very satisfied with this year’s deal given a strong order book that enabled the spread to be tightened. He said that the issuer chose a 12 year maturity to differentiate its deal from the series of 10 year issues that were priced in the preceding days.

“A 12 year maturity is very interesting as it is a strong funding source for the group and shows the confidence of the investors in our bank,” he told The Covered Bond Report.

The deal is not eligible for the ECB’s second covered bond purchase programme (CBPP2), under which only bonds with a maximum residual maturity of 10.5 years, alongside other criteria, can be purchased. However, this was not a concern for the issuer, according to Ander.

“The bank has a good credit story, we are a cooperative group, mainly involved in the retail banking business in France and Germany, and our initial goal was only to issue a Eu1bn deal,” he said. “That should be possible without the support of ECB.”

Peter said that the new issue premium amounted to around 15bp.

“CM-CIC enjoys good reception from a credit line point of view,” he said.

Nearly Eu1.4bn of orders were placed for the obligation à l’habitat issue, with 55 investors participating. Another syndicate official on the deal said that it gained good momentum immediately after official guidance was released.

“The extra yield and opportunity to diversify convinced investors to focus on this deal in a crowded primary market, thus allowing Crédit Mutuel-CIC to price a larger than expected benchmark inside the initial guidance,” he said.

The deal came with “the all-important” 4.125% coupon, he added.

Peter pointed out that French investors participated in CM-CIC’s transaction to a greater degree than in the 10 year French deals that came before it, with the 12 year maturity a contributing factor. CM-CIC’s deal is also the first French benchmark this year where domestic participation surpassed that of German and Austrian investors.

France was allocated 56%, Germany and Austria 35%, the UK 6%, and others 3%. Insurance companies took 54%, asset managers 40%, banks 3%, and others 3%.