Crédit Agricole Home Loan SFH is planning to issue the first French social covered bond backed by housing loans, a short seven year euro benchmark set for launch after investor calls tomorrow (Wednesday), with proceeds earmarked for regulated loans for low to medium income households.

The French issuer has mandated BBVA, Commerzbank, Crédit Agricole, Danske, LBBW, Santander and SG for investor calls tomorrow, with the transaction expected to be issued thereafter, subject to market conditions.

According to pre-announcement comparables circulated by the leads, Crédit Agricole May 2027s and August 2028s were quoted at mid-swaps minus 1bp, mid, its January 2029s at minus 0.5bp, and its green December 2029 issue flat to mid-swaps.

The social covered bond will be launched under the Crédit Agricole group’s overall social bond framework, which was inaugurated with a €1bn seven year senior non-preferred issue in December 2020. The use of proceeds categories are territorial economic development, access to healthcare services, and socio-economic advancement and empowerment.

Social housing is a sub-category of socio-economic advancement and empowerment, and the subject of the social covered bond will be the purchase or construction of housing for low to medium income households in France.

The assets are comprised of two regulated products: mortgages for social ownership (prêt à l’accession sociale, PAS) and interest-free loans (prêt à paux péro, PTZ). These are granted primarily in regions where access to housing is difficult due to market prices.

Crédit Agricole is the leading player in these products in France, with a 42% share of new loans in 2020. These social assets represent 15% of Crédit Agricole Home Loan SFH’s cover pool, as of March 2021, amounting to €7.14bn – excluding PAS and PTZ loans financing new constructions from 2017 onwards, which are currently reflected in a green sub-portfolio.

Vigeo Eiris, the second party opinion provider, assessed the framework and stated it will have a potentially “robust” positive impact, with likely contributions to SDGs 7 and 11, No Poverty and Sustainable Cities & Communities.

“Financing social housing remains a social challenge in France,” it said. “The target population has been clearly identified and appears to be the population of most need. The category has the potential to provide a long term social improvement and empowerment.”

Crédit Agricole sold an inaugural green covered bond in November 2019, a €1.25bn 10 year issue. French social covered bond issuance has so far been confined to public sector-backed issues from Caffil.