French public sector defies challenging market conditions

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A week of market volatility brought on by central banks’ hawkish turns, increasing tensions in the Russia-Ukraine war, and the ongoing energy and inflationary crisis would not appear to be auspicious timing to access the bond markets.

Yet the French public sector did just that successfully this week through three sizeable transactions for different issuers over two days, with Natixis CIB acting as joint bookrunner for all three.

CADES (Caisse d'amortissement de la dette sociale), the French agency tasked with amortizing French social debt, was first to come to the market with a new 10-year €5 billion euro social bond on Monday 19th September. Investor demand was strong, topping €11.5 billion across 170 different investors, with 64% of the final amount allocated to ESG investors. This issuance takes the total raised by CADES in 2022 to €29 billion, representing 72.5% of its total funding program for the year.

On Tuesday 20th September,  ALS (Action Logement Services), the agency financing public policies to support social housing in France, and CCCIF (Caisse Centrale du Credit Immobilier de France), the French institution benefiting from unconditional, irrevocable and first demand guarantee from the Republic of France, both came to the market.

ALS’s issuance was a 15-year sustainable bond, raising a total of €750 million. It was ALS’s second bond issuance this year under its 2022 funding program, and its fifth so far under its sustainable bond framework, demonstrating ALS’s increasing position as an ESG issuer within the French public sector space.

CCCIF’s issuance, a €500 million five-year bond, marked the agency’s return to the capital markets after a two-year break. Investor demand was strong, allowing the CCCIF to access the short-to-medium end of the yield curve that has often proved challenging for French issuers this year and to benefit from favorable execution that allowed a tightening of the spread by two basis points during the execution.

Gabriel Levy, Global Head of Debt Capital Markets at Natixis CIB, said: “The success of these three issuers in accessing the market at their target funding sizes and maturities, despite market volatility, demonstrates the strong investor demand for French public sector debt. Natixis CIB is proud to serve as a trusted partner for French public sector clients, and to accompany them in achieving their funding objectives even under challenging market conditions.”


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