Crédit Agricole sold a Eu1bn long seven year OH today (Monday) that attracted over Eu1.8bn of orders despite being the French bank’s fifth benchmark covered bond this year, with a pick-up of around 25bp versus OATs considered key to the deal’s success on a day with competing supply.

Crédit Agricole Home Loan SFH leads ABN Amro, BBVA, Crédit Agricole and Toronto-Dominion launched the Eu1bn no-grow September 2024 obligation de financement l’habitat (OH) issue with guidance of the mid-swaps minus 1bp area.

After one hour, guidance was revised to the minus 3bp area on the back of books over Eu1.5bn. The spread was later fixed at minus 5bp with books over Eu1.8bn.

“It’s obviously a very satisfying result for the issuer,” said a syndicate banker at one of the leads. “We have seen a little bit of softness in trades last week, but the deal we have done today suggests the market is still in good shape – or at least shows clearly that this name is well bid.”

A banker away from the leads agreed.

“With books approaching two times subscribed for Eu1bn, it is a good outcome, on a day with competing supply,” he said. “It was probably helped by the fact they had capped the size, which was a good idea, especially for an issuer that has been so active.”

Including today’s trade, Crédit Agricole has issued Eu5.4bn of benchmark covered bonds this year. It sold a Eu2.5bn three-tranche long eight, 15 and 20 year deal in January, later tapping the 20 year tranche by Eu400m, and a Eu1.5bn 10 year in April.

“It has been a very busy year for the issuer, but that is offsetting the fact that they weren’t necessarily printing a lot in the years before, when they did one or two deals per year,” said the lead syndicate banker. “The issuer has growing needs on the funding side, hence the recent activity.

“But clearly if you look at the size of the book today it hasn’t had a negative impact.”

Bankers said demand for the long seven year was boosted because it offered a pick-up of around 25bp versus OATs.

“It looks very attractive versus the sovereign,” said the lead syndicate banker. “Those people that look at trades in comparison with govvies are very happy to play in French covereds at the moment.”

The last benchmark covered bond from France in the seven year part of the curve was a Eu1bn straight seven year for Caffil on 3 May. The deal was also priced at 5bp through mid-swaps and seen trading at around minus 6bp, mid, today.

Some bankers said Crédit Agricole’s deal today was therefore arguably priced flat to fair value, or offered a 1bp premium at most. The lead syndicate banker said interpolated fair value for the new issue based on the bid side of Crédit Agricole’s curve was minus 4bp, implying that the deal was priced 1bp through fair value.