Crédit Agricole is set to buy back Eu3.061bn of its outstanding hard bullet covered bonds after completing a cash tender offer yesterday (Monday) afternoon, having increased the maximum amount that it can purchase from an initial cap of Eu2bn to meet investor demand.

Crédit Agricole this (Tuesday) morning announced the preliminary results of its tender offer to buy back seven series of outstanding hard bullet, euro-denominated covered bonds issued between 2010 and 2013 by Crédit Agricole Home Loan SFH, after the tender offer closed yesterday afternoon.

The French bank had initially said that the maximum aggregate amount of the covered bonds that Crédit Agricole could purchase was Eu2bn, but added that it reserved the right to increase this amount.

Crédit Agricole today said it has decided to increase the maximum amount in order to repurchase all the bonds validly tendered. The preliminary amount accepted for purchase is Eu3.061bn.

“It’s pretty common to increase the size in these kind of exercises,” said a banker close to the offer. “If you think about it from the standpoint of the investors choosing to sell the bonds, and the issuer has the right to accept a larger amount than they initially set out to, there is no issue with that.

“They simply bought back more because the investors wanted to sell more than the Eu2bn cap.”

According to the preliminary results, Crédit Agricole will repurchase:

Eu513.95m of a Eu1.675bn 3.25% March 2017 issue FR0010875880

Eu344.2bn of a Eu1.5bn 2.125% July 2017 issue FR0011230598

Eu728.8m of a Eu1.85bn 3.50% June 2018 issue FR0011060367

Eu235.7m of a Eu1.25bn 1.625% March 2020 issue FR0011440528

Eu594.7m of a Eu2bn 3.875% January 2021 issue FR0010989087

Eu210.8m of a Eu1.5bn 4.00% January 2022 issue FR0011179852

Eu433.1m of a Eu2.4bn 4.00% July 2025 issue FR0010920900

Last Wednesday, Crédit Agricole Home Loan SFH sold a Eu3.25bn dual tranche seven and 15 year covered bond that attracted combined orders of over Eu5.8bn. Market participants said the size of the book had probably been boosted by the tender offer.

Crédit Agricole said the preliminary results are based on initial tabulations of tenders received, which remain subject to confirmation by the issuer.

The purchase price for the bonds of each series repurchased will be determined today at 15:00 CET, Crédit Agricole added, with the final results to be announced as soon as reasonably practicable.

The covered bonds purchased in the tender offer will be transferred to Crédit Agricole Home Loan SFH following settlement and then immediately cancelled. The settlement date is expected to be Thursday.

Crédit Agricole Home Loan SFH will on 21 April call meetings of the bondholders of the relevant covered bonds that have not been purchased and cancelled to seek approval to switch the issues to soft bullet structures. Crédit Agricole Home Loan SFH began issuing soft bullet covered bonds in November 2014.

Crédit Agricole had also been targeting four series of Tier 2 bonds in the tender offer, of which Eu1.237bn equivalent has been accepted for purchase on a preliminary basis.