Axa Bank Europe SCF today (Wednesday) sold a Eu750m seven year OF, its first benchmark since 2012, and bankers away from the deal were surprised it did not achieve pricing tighter to other French issuers but said a book of Eu1.6bn was nevertheless a good result.

AXA Bank Europe SCF, the French issuing entity of Belgium’s Axa Bank Europe, last issued a benchmark covered bond in September 2012. The issuer has since added French collateral to its cover pool alongside its original Belgian RMBS collateral, making it a rare multi-jurisdictional residential mortgage/home loan cover pool.

After holding investor calls yesterday (Tuesday), Axa Bank Europe SCF leads BNP Paribas, Commerzbank, HSBC, ING and Natixis launched the seven year obligations foncières with guidance of the 23bp over mid-swaps area, before revising guidance to 20bp plus or minus 2bp and fixing the size at Eu750m. The deal was then re-offered at 18bp, before the book closed at around Eu1.6bn.

Syndicate officials away from the leads said fair value for the new issue is difficult to calculate because Axa’s outstanding bonds are tight and illiquid, with its September 2019s quoted at 4bp, bid, but estimated that it offered a new issue premium of around 8bp.

They noted that the deal had been priced roughly in line with recent Belgian supply, seeing Belfius March 2022s at 17.5bp, bid, and KBC September 2022s at 18.5bp.

Some syndicate officials said this was appropriate, given that Axa’s collateral is still predominantly Belgian. However, others said this was surprising, as they had expected the deal to be priced closer to recent French supply.

“We have Crédit Agricole pricing a seven year OH today at 9bp, and Axa is, in name at least, a French issuer,” said one. “I would have expected this to have come somewhere between the French and the Belgians.”

Another banker agreed that the deal had been priced wider than expected, but said it still represented a good result for Axa and suggested that concerns over the collateral could have had an impact on the pricing.

“Maybe they played it safe, but they managed to tighten the spread a fair bit and they are far from a regular issuer,” he said. “Some accounts may have had questions about the mixed collateral, too, which could explain the cautious start.”

In an investor presentation, AXA Bank Europe SCF noted 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, while Belgian RMBS currently constitute the majority of the cover pool, at 90%. It has submitted an action plan to French regulator ACPR in relation to this (read more here).