Compagnie de Financement Foncier sold a new issue with a rare five year maturity today (Monday) and paid a slightly elevated premium that bankers said helped it generate some €2.45bn of orders and hit a €1.5bn size, in the BPCE group’s fifth euro benchmark covered bond transaction this year.

CFF leads Citi, ING, LBBW, Natixis, Nordea, NordLB, UBS and UniCredit went out this morning with initial guidance of the mid-swaps plus 5bp area for the July 2026 issue, rated Aaa/AAA/AAA (Moody’s/S&P/Scope). After an hour and a half, they reported books above €1.2bn, including €50m joint lead manager interest. After two and a half hours, they set the spread at 3bp on the back of books over €1.45bn, including €50m JLM interest. After three hours and 20 minutes, the size was fixed at €1.5bn on the back of books over €2.45bn, including €200m in JLM interest.

According to pre-announcement comparables circulated by the leads, CFF May 2026s were quoted at mid-swaps flat, September 2026s at plus 0.25bp and April 2027s at plus 0.5bp. Crédit Mutuel April 2026s were quoted at minus 0.5bp, and Caffil April 2026s at minus 0.75bp.

Bankers away from the leads were positive about the transaction, although they noted that a new issue premium of at least 3bp was at the upper end of those paid on recent deals. Although CFF’s curve was judged to have implied fair value of mid-swaps flat, they said other outstanding French issuance could imply a slightly tighter level, and hence a slightly higher new issue premium than 3bp.

One noted that the NIP paid by CFF for its €1.5bn five year was higher than the 1bp-2bp paid by compatriot Crédit Agricole for a shorter and smaller €1bn seven year debut social covered bond on Thursday – the re-offer of 3bp was also wider than Crédit Agricole’s 2bp. He said the higher NIP likely reflected CFF targeting a larger size and also the volume and regularity of issuance from the BPCE group this year – CFF itself raised €1.5bn in April, while BPCE has issued €4.75bn in five tranches, including the last €1.5bn benchmark, a long nine year in May.

“If you want to get big size and you don’t have something like green or social to offer, you need to play on what you can to attract investors, and that’s the new issue premium,” the banker said. “As an overall group, they have quite a chunky funding programme, so they can’t be cute with investors.”

He said the decision to set the spread at 3bp appeared to have done the trick, with the book growing substantially thereafter. Another agreed that leaving a little extra NIP for investors on the table was a “smart move” and helped with the deal’s momentum.

The leads noted that, balanced against the level of supply from CFF within the BPCE group, the issuer has more than €7bn of redemptions this year, more than half of which has already matured.

The five year euro benchmark is the first from a core Eurozone jurisdiction this year and the shortest dated, and only the second five year from any issuer since March. The short maturity was “a good pick”, in the words of one banker, who said that some investors appreciated the defensive maturity given the more uncertain rate outlook, even if the deal was priced at a negative yield of minus 0.23%.

“For a considerable period, this market almost exclusively focused on longer dated bonds,” said another banker away from the leads. “Lately, everyone squeezed themselves in around the seven to eight year bracket, and something significantly shorter is definitely something that people like.”