Axa Bank Europe SCF is set to launch its first benchmark obligations foncières since 2012 tomorrow (Wednesday), after having added French collateral to its previously exclusively Belgian pool, and with contingency plans in place should intra-group RMBS become ineligible for CRD-compliant covered bonds.

AXA Bank Europe SCF, the French issuing entity of Belgium’s Axa Bank Europe, is holding investor calls today (Tuesday) ahead of the planned euro-denominated benchmark covered bond, which is expected tomorrow. BNP Paribas, Commerzbank, HSBC, ING and Natixis have the mandate. A syndicate official at one of the leads added that the deal is expected to have a medium maturity, most likely a seven year.

The deal will be the first benchmark covered bond from the issuer since September 2012 and the first since French collateral was added to its cover pool alongside its original Belgian collateral, making it a rare multi-jurisdictional residential mortgage/home loan cover pool.

The obligations foncières issued by AXA Bank Europe SCF were originally secured by AAA rated RMBS Notes backed by prime Belgian residential mortgage loans originated and serviced by Axa Bank Europe.

In an investor presentation, the issuer notes that since November 2014, AXA Bank Europe SCF has also been used as a funding platform for Axa Banque, a French Axa SA subsidiary. The issuer’s cover pool now also includes mortgage promissory notes backed by guaranteed French residential home loans originated by AXA Banque in France.

Belgian RMBS continue to constitute the majority of the cover pool, at 90%, and the inclusion of mortgage promissory notes is limited by law to a maximum of 10% of AXA Bank Europe SCF’s total balance sheet.

The issuer notes that from 1 January 2018, CRD IV/CRR requires that own (group) issued RMBS subscribed by Sociétés de Crédit Foncier (SCFs) may only make up 10% of the nominal amount of obligations foncières and other liabilities benefiting from priority rights of payment.

Axa Bank Europe SCF submitted an action plan to French regulator ACPR in December detailing two options for complying with this requirement. Its preferred option is via legislative changes to harmonise the Sociétés de Crédit Foncier and Sociétés de Financement de l’Habitat (SFHs) frameworks that it says are being discussed in France, which includes key measures such as: granting permission for SCFs to make use of secured loans (“prêts sécurisés”) on the asset side; removal of the 10% cap applicable to mortgage promissory notes (“billets à ordre”); and removal of a 35% limit applicable to guaranteed home loans.

“If the SCF/SFH alignment becomes effective in 2016, the RMBS senior notes included in ABE SCF’s cover pool will be substituted by secured loans secured by eligible residential home loans which would be pledged to the benefit of ABE SCF,” it said, noting that secured loans are today only allowed to be used for SFH vehicles.

Its alternative option, if the preferred option is not possible, would be to consider converting AXA Bank Europe SCF into a Société de Financement de l’Habitat.

The obligations foncières issued by AXA Bank Europe SCF are rated triple-A by Moody’s and Fitch.