Caffil rounded off its funding for the year with a second benchmark covered bond yesterday (Wednesday), a Eu500m deal that succeeded in spite of coming in the rare and potentially tricky 15 year maturity.

Philippe Mills

Leads Crédit Agricole, Morgan Stanley, RBS, Société Générale and UniCredit went out with initial price thoughts of the low to mid-50s over mid-swaps before pricing the issue at 50bp over on the back of more than Eu900m of orders comprising 61 accounts. A syndicate official at one of the leads said that such a high number of accounts for a 15 year trade was “exceptional” and down to the high quality of the issuer.

French investors took 44% of the bonds, Germany and Austria 26%, Italy 9%, the UK 8%, and Switzerland 7%. Insurance companies were allocated 55%, banks 25% and asset managers 16%.

The lead syndicate banker put the spread over interpolated OATs at 7bp, describing this as a “competitive result”.

“We are happy here given the overall backdrop and the competing supply,” he said, “as well as the volatility on the rate front and the Bund rally observed since the beginning of the week.”

A syndicate official away from the leads said that the issuer “hit the nail on the head” by opting for a Eu500m size, suggesting that it would have had to pay up some 5bp if it had gone for a Eu1bn deal.

The deal is Caffil’s second benchmark covered bond since it succeeded Dexia Municipal Agency, following a debut Eu1bn seven year deal on 9 July. According to Caffil, it has, including yesterday’s new issue, raised more than Eu3bn in the past three months though public issues and private placements.

“This successful issue – especially with its long maturity – allows Caisse Française de Financement Local to achieve its goal of new funding for 2013 and will be the last this year,” said Philippe Mills, chairman and CEO of Société de Financement Local (SFIL) and chairman of the Supervisory Board of Caffil.

“Only a few months after its creation in January 2013, Caisse Française de Financement Local has confirmed – thanks to its unique status given by quality shareholders and partners – its ability to raise resources with a maturity, cost and amount that are perfectly adapted to the financing of local governments and public healthcare facilities in France.”