Acquisition of a direct stake in Dexia Municipal Agency by the French state under a revised restructuring plan would be credit positive for Dexia MA obligations foncières, said covered bond analysts after French media reported such a move.

According to a report in French newspaper Le Monde, a new plan for the restructuring of Dexia MA would involve the French state stepping in to take a 25% stake, allowing Caisse des Dépôts et Consignations (CDC) to take a minority holding of 35% rather than a majority stake, as was previously planned. La Banque Postale would take 5% and Dexia Crédit Local 35%. A separate article in French business newspaper Les Echos is said to put participation by the French state and CDC at 30% each, with La Banque Postale and DCL taking 5% and 35% stakes, respectively.

Dexia has not released any official communication on the restructuring of Dexia MA since October, when it said that ownership of the public sector lender would be split between CDC, La Banque Postale, and Dexia Credit Local, with CDC due to take a majority stake of 65%, La Banque Postale a 5% share, and Dexia Crédit Local the balance.

According to the report in Le Monde, an agreement regarding a guarantee of Eu10bn of structured loans to French local governments remains in place. It suggested that the original restructuring plan is being reworked because CDC, the main provider of financing to implement public policy, considered it too risky.

Basing their opinion on the article in Le Monde, Crédit Agricole analysts said that the direct entry of the French state into the capital structure “leaves no doubt as to its commitment” to Dexia MA.

“This is slightly positive but no game-changer in our view,” they said. “We had always argued that the safeguarding of DexMA is a priority for the French government in order to provide funding to French local authorities, as other lenders have significantly reduced that exposure.”

They said that CA’s trading desk had tightened Dexia MA obligations foncières by around 15bp-25bp and that they would expect further tightening and a steepening of Dexia MA’s curve should the deal be confirmed.

Landesbank Baden-Württemberg analyst Brigitte Martineau-Trauner, whose source was the Les Echos article, said that the direct involvement of the French state represents a crucial breakthrough in tough negotiations around Dexia in France, and that a solution along these lines would be positive for investors in Dexia MA.

“The solution is positive for investors, as the state’s liability has increased further,” she said. “This has paved the way for the planned new joint municipality lender which La Banque Postale (65%) and CDC (35%) want to set up and whose new business DexMA is supposed to fund in the future.”

Bernd Volk, head of covered bond research at Deutsche Bank, said that Dexia obligations foncières will benefit from further sovereign support in case of need, and that the overall credit quality of Dexia MA’s assets, including the guarantee of the Eu10bn loan portfolio, can be considered relatively strong.