Compagnie de Financement Foncier sold its second benchmark covered bond in less than two months yesterday (Tuesday), a Eu1bn 10 year issue that an official at the issuer said took advantage of good long end demand and reflected a positive perception of the issuer’s credit profile.

More than Eu1.9bn of orders from 94 accounts were placed for the deal, which was priced at 32bp over mid-swaps via Deutsche Bank, Natixis, Nykredit, Santander and UBS.

Crédit Foncier, parent of CFF

Encouraged by constructive market conditions and a lack of supply, and mindful of Thursday being a public holiday in many parts of Europe, the issuer on Monday morning decided to pursue a deal and began Asia-targeted marketing overnight to Tuesday, according to Paul Dudouit, head of medium and long term funding at Compagnie de Financement Foncier.

The mandate was officially announced on Monday afternoon.

“We opened order books at nine yesterday morning and the demand was strong, because we very quickly got to Eu1.5bn of orders on the basis of guidance of 33bp (plus/minus 1bp),” he said.

The issuer was in the market alongside Bank of Montreal, which was selling its inaugural legislative issue, and first euro covered bond since 2008. (See separate article.)

The order book for CFF’s deal grew to just shy of Eu2bn, with the leads fixing the spread at 32bp over for what was a Eu1bn no-grow deal. Initial price thoughts had been set at the mid-30s over, generating more than Eu1.3bn of indications of interest.

“The reception shows the high regard in the market for our credit,” said Dudouit.

He said that the deal was launched in part in response to good demand observed at the long end of the curve in the secondary market, with performance in this segment suggesting a successful new issue was to be had.

According to a lead syndicate official, the bonds offered a high single-digit premium over French government bonds, with 10 year OATs trading at around 24bp over.

Dudouit noted that the obligations foncières were mainly bought by international investors, with domestic accounts only accounting for 16% of allocations, and that there was also supporting demand from central banks, which took 14%.

Germany and Austria were allocated 41%, France 16%, the Nordics 8%, the Benelux 8%, the UK 7%, Switzerland 6%, Asia 6%, and others 8%.

Banks took 34%, asset managers 25%, insurance companies 24%, central banks and public institutions 14%, and others 3%.

The obligations foncières transaction is part of CFF’s plans to build a liquid yield curve of euro benchmark covered bonds, and CFF is on track with its funding programme for 2014, according to Dudouit.

CFF is traditionally an active issuer of benchmark covered bonds, having launched three benchmarks in each of 2011 and 2012, for example, but last year only sold two taps as it restructured its cover pool to regain ECB repo eligibility for its covered bonds following a rule change about securitisation exposure.

Fitch on Thursday affirmed CFF’s obligations foncières at AA+, on stable outlook, incorporating a lower breakeven overcollateralisation level driven mainly by the change in the composition of the cover pool and the removal of securitisation exposures in particular.

CFF is a fully-owned subsidiary of residential mortgage and public sector lender Crédit Foncier de France, providing financing of its parent’s lending activities, mainly via the issuance of covered bonds. It recently announced the mandate for a public RMBS, to be issued by special purpose vehicle CFHL-1 2014, which would be its first in 10 years.