Compagnie de Financement Foncier yesterday (Monday) priced its third euro benchmark since CBPP3 was announced in September, a Eu1bn 10 year trade that an official at the issuer noted was launched into a market where the level of activity, volatility and Eurosystem bid had changed.

The week after CBPP3 was unveiled on 4 September, CFF priced a Eu1bn five year benchmark at 5bp through mid-swaps on the back of a Eu4.8bn order book and in early November it sold a Eu1.5bn seven year at the same level on the back of Eu3.15bn of demand.

Yesterday’s new issue was a Eu1bn 10 year and leads BBVA, BNP Paribas, Commerzbank, LBBW and Natixis went out at 0845 CET with initial price thoughts of the 10bp over mid-swaps area, which a syndicate official at one of the leads said was equivalent to a limited new issue premium of around 4bp. Over Eu1bn of indications of interest were placed on this basis in around an hour and a half, and guidance was then revised to the 8bp area and the size set at Eu1bn. Books were closed at 1215 with Eu1.4bn of orders from more than 70 accounts, and the pricing fixed at 7bp over, equivalent to 1bp of new issue premium, according to the lead syndicate official.

“We planned a Eu1bn no-grow transaction and achieved the size that we had in mind with great support from a variety of investors,” said Paul Dudouit, head of medium and long term funding at CFF. “We are very happy to have been able to take advantage of this window this morning and to be the first French covered bond issuer in 2015.

“There is virtually no concession compared to the secondary market, and this was our target,” he added.

Central banks were allocated 43% of the transaction, banks and private banks 29%, asset managers 16%, insurance companies and pension funds 10%, and others 2%. France took 43%, Germany and Austria 27%, Asia 10%, the Nordics 10%, southern Europe 3%, the UK and Ireland 3%, and other 4%.

Dudouit said that although the transaction was well supported by central banks, CBPP3 involvement was more restrained than previously.

“The Eurosystem is of course looking for this kind of transaction, but now they are not pushing so hard compared with 2014,” he said.

Dudouit contrasted the situation today with conditions prevailing when CFF launched its last two benchmarks.

“It’s a different market because we are in January so it’s very busy – we saw three covered bond issues and a lot of senior unsecured today, too. So there’s a lot for the investors to do and the primary market in that respect is not comparable to what we saw in September or October. The market right now is also much more volatile.

“We are therefore no longer in a market where investors are inflating their orders to be sure that they will get allocated,” he added. “We had a lot of discussions with them and assured them that they will be allocated what they are looking for.”

According to Dudouit, the 10 year maturity fits in with CFF’s general benchmark strategy.

“We are working on all the curve,” he said, “and the 10 year maturity is a classic benchmark maturity for CFF. We did 10 years last year, and also a seven and two five years.

“With this 10 year we are in line with our planning and the strategy of being present on benchmark maturities across the full year.”