Caffil is planning to launch its first green bond after a roadshow next week, with the proceeds earmarked for supporting green investments by French local authorities. The mandate comes after an agreement in principle for the transfer of Caffil parent SFIL to the Caisse des Dépôts group.

Caisse Française de Financement Local (Caffil) will roadshow its new green bond framework from Tuesday of next week (22 October), with a view to issuing an intermediate to long maturity euro benchmark public sector obligation foncière issue thereafter. Crédit Agricole, HSBC, structuring advisor Natixis, SG and UniCredit are mandated for the exercise.

Caffil has already issued a social covered bond, a €1bn eight year in February that was the first green or social covered bond from France. Société Générale sold the first green French covered bond, a €1bn 10 year in July, although whereas that was backed by residential mortgages, Caffil’s issuance is public sector-backed, and it will be the first such green covered bond.

The SFIL group’s green bonds – to be issued in senior unsecured format by SFIL as well as Caffil’s covered bonds – will finance green investments by French local authorities. The framework has five categories: territorial mobility and soft urban transport; sustainable water and sanitation and climate change adaptation; waste management and valuation; energy efficiency of construction and urban development; and renewable energy.

The announcement of the green bond mandate today (Monday) came after plans for the transfer of the majority of SFIL’s capital to Caisse des Dépôts et Consignations (CDC) were confirmed on Thursday, following discussions announced in November 2018.

The French state owns 75% of SFIL’s capital, La Banque Postale 5%, and state bank CDC 20%, but under the agreement in principle that has been reached between the three, CDC will own all SFIL’s share capital except for one ordinary share to be retained by the French state.

“CDC would become the reference shareholder of SFIL and demonstrate its commitment to upholding SFIL’s status as public development bank by a letter of support, supplemented by a similar letter from the State,” said SFIL.

An exclusive partnership between SFIL and La Banque Postale to finance the French local public sector will be extended in advance to 2026, under the agreement. Between them, they have a market-leading 20%-25% share of local public sector lending in France.

The transfer is expected to be completed during the first quarter of 2020.