CRH set for comeback after regulatory uncertainty lifted
Caisse de Refinancement de l’Habitat (CRH) is preparing its first euro benchmark covered bond issue since June 2013 with a roadshow starting on Wednesday of next week, now that uncertainty arising from the large exposures limit and leverage ratio regulations have been dealt with.
The French issuer has mandated Crédit Agricole, HSBC, LBBW, Natixis and SG to arrange investor meetings from 18 September, after which a euro benchmark is expected to follow, subject to market conditions.
Any deal will be CRH’s first since June 2013, when it issued a EUR500m January 2025 issue.
At the peak of its activity in the wake of the onset of the financial crisis, CRH was one of the biggest covered bond issuers, raising EUR12bn in 2011 and having outstandings of EUR57bn in 2013. However, regulatory changes in the wake of the crisis caused it to withdraw from new issuance.
CRH raises funding on behalf of several leading French banks who are its shareholders and its initial problems were caused by large exposures limit regulation. It resolved this issue with changes to its by-laws in mid-2016, but – as CRH CEO Marc Nocart told The CBR in August 2016 – it then had to deal with potentially damaging leverage ratio proposals. This has now also been resolved, with CRH taking advantage of an exemption in CRR amendments agreed in May.
The issuer has a newly-established EUR25bn MTN programme and is understood to be aiming to be a regular issuer once more, with an indicative funding plan target of EUR3bn-EUR4bn over the next 18 months.
“It’s a very interesting issue that’s going to be the comeback trade of the year, if not of all time,” said a syndicate banker at one of the leads. “It’s a very strong issuer given how it’s intertwined in the French banking system.
“It previously played an extremely important role in the French financial industry and will do so again in the future.”
Its five shareholders are – in order of share based on volumes of funding – Crédit Mutuel, Crédit Agricole, Société Générale, BNP Paribas and BPCE.