Crédit Agricole attracted over Eu2.1bn of orders to a postponed Eu500m 10 year OF today (Friday) whose rarity value was deemed attractive to investors, being the French bank’s first public sector benchmark since 2013, but disagreements on the best comparables led to different views on pricing.

The new issue had been expected to be launched earlier in the week, after the issuer published a mandate on Tuesday afternoon. However, on Wednesday morning it announced that due to “an unexpected minor technical issue related to the documentation” of the potential issue it has decided to postpone the deal.

Then this morning Crédit Agricole Public Sector SCF leads ABN Amro, Banca IMI, BBVA, Crédit Agricole and DZ Bank launched the Eu500m no-grow 10 year obligations foncières with guidance of the mid-swaps minus 3bp area. This was then revised to the minus 5bp area on the back of books over Eu1.5bn, before the deal was re-offered at minus 7bp with books over Eu1.8bn. The book closed at Eu2.1bn, pre-reconciliation.

“The spread is at the tighter end of the supply we’ve seen recently and a Eu2.1bn book shows a very strong response,” said a syndicate banker at one of the leads. “The Eu500m no-grow size helped, but I think that the result reflects that Crédit Agricole’s public sector programme is a bit scarcer.”

The deal is the first benchmark obligations foncières (OFs) from Crédit Agricole Public Sector SCF since May 2013, when it sold a Eu1bn June 2023 issue.

It is also the tightest benchmark covered bond from France since August 2015, when Crédit Agricole Home Loan SFH priced a Eu1.25bn October 2021 issue at minus 8bp, and the tightest with a maturity of 10 years or longer since April of the same year, when BNP Paribas priced a Eu750m April 2025 issue at minus 11bp.

Some bankers said the deal offered a new issue premium of 5bp-6bp, noting that while Crédit Agricole Public Sector SCF has only two shorter-dated deals outstanding, its issuance trades in line with that of Crédit Agricole Home Loan SFH, which has a more established curve.

Crédit Agricole Public Sector SCF’s June 2023s were seen pre-announcement at minus 14bp, bid, with Crédit Agricole Home Loan SFH March 2023s at minus 14bp, September 2023s at minus 16bp, and July 2025s at minus 14bp.

A syndicate banker away from the deal suggested that the initial price guidance was overly cautious and said the deal could have been priced around 2bp tighter.

“They have scarcity value, it was a Eu500m no-grow, and the ECB was playing, so I was expecting something tighter than guidance of minus 3bp,” he said. “You can’t tighten much more than 4bp through the process, so minus 7bp was clearly the floor.

“Maybe they wanted to be friendly to investors, but I would have put this at minus 9bp-8bp, given those supportive factors as well as the tone of the market and the recent BNP Paribas Fortis seven year, which was priced at minus 10bp.”

Bankers away from the leads suggested the deal might also have been priced generously because the leads wanted to offer a pick-up versus the sovereign, with the final spread at 5bp above OATs.

A syndicate banker at one of Crédit Agricole’s leads said, however, that there was no deliberate effort to price the deal more generously and said the leads had focussed on the level at which the last French benchmark was priced, rather than secondary levels. Compagnie de Financement Foncier on 5 September priced a Eu1bn 10 year OF at minus 5bp.

“To come at minus 7bp, a couple of basis points tighter than CFF were able to print, is a pretty strong outcome, especially when the market hasn’t changed much since,” said the lead syndicate banker. “That’s how we’re seeing it here.

“At the moment and especially for core jurisdictions, secondary curves are flat between three years and 10 years. I think it’s much more relevant to look at where the demand actually is and where deals have cleared in the primary market, rather than where squeezed secondaries are quoted.”

A banker away from the leads saw the merits of both arguments.

“Compared to secondaries it looks cheap; compared to recent prints in looks in line,” he said. “At the end of the day, it was solid and they got the deal done without any fuss, which they’ll be pleased with given the potential complications after the postponement.”

Bankers said the delay did not appear to have had any impact on the outcome, and the lead syndicate banker said the deal had been priced at the same level it would have been earlier in the week.

“The ECB meeting yesterday was the big risk in the meantime, but that turned out to be pretty much a non-event,” he said. “All that happened is the process happened a couple of days later than it would have.”

Following Crédit Agricole’s deal, new euro benchmark covered bond supply stands at Eu7.5bn this month, compared with Eu16.25bn in the whole of October 2015. Bankers said that overall supply for this month is likely to fall short of last year’s level, with the pipeline for next week relatively clear.

Syndicate bankers said one core issuer could announce a mandate for a euro benchmark covered bond early next week, but said this would be launched after a roadshow.

“Except that one, there is nothing on the radar as of yet,” said one.