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Compagnie de Financement Foncier
Obligations Foncières
Sandrine GUERIN
Deputy CEO, Crédit Foncier
2
Historical issuesHistorical issues
3
Compagnie de Financement Foncier: Compagnie de Financement Foncier: MilestonesMilestones>>> Established in 1852, Crédit Foncier de France quickly became the leading lender to local authorities, and maintained that position until World War II. Since the 1950’s, Crédit Foncier de France has been entrusted with several public interest assignments.
Crédit Foncier de France is created as the first
société de crédit foncierand issues its first
obligations foncières
Leading lender to local authorities
After WWII, Crédit Foncierde France becomes the
leader in the social housing sector with State subsidised loans
Caisse d ’Epargne acquiresCrédit Foncier
Compagnie de Financement Foncier
is founded
New legal framework for obligations foncières
Leading position on obligations foncières market
Issuance of a 50 years maturity € 1 bn
obligation foncière
1852 1860 1950 1999 2006
4
Profile:Profile: Compagnie de Financement FoncierCompagnie de Financement Foncier
Missions
(Articles L 515 – 13 et seq. of the Code monétaire et financier, the French Monetary and Financial Code)
Grant or acquire eligible assets:
Loans with a first rank mortgage,
Local authorities and public sector loans,
Securities issued or guaranteed by local authorities and public entities,
Senior securisation units of mortgage loans or loans to public entities.
Issue obligations foncières (French covered bonds).
5
Profile: Profile: Covered BondsCovered Bonds
>>> Recent legal developments in Europe have provided a clear definition for covered bonds (UCITS) and ensure :
Legal security Obligation to have a domestic legal framework which defines the covered
bonds, Privileged claim on eligible assets.
Economic security High quality assets: i.e public sector, first rank mortgages,
Permanent overcollateralisation.
Institutional Security Issuer is a European credit institution,
Specific control ensured by independent auditors.
6
Transparency & Security: Transparency & Security: the French legal frameworkthe French legal framework
>>> Stringent legal and regulatory framework designed to ensure maximum protection.
Transparency of the activity
A dedicated balance sheet and a sole purpose,
Mortgage loans, loans to local authorities and public entities.
Protection of bond holders
The bankruptcy or liquidation of its parent corporation cannot be extended to the société de crédit foncier itself,
Investors benefit from the privilege of obligations foncières,
Permanent overcollateralisation,
No ALM mismatch. All assets and liabilities are swapped to euros.
7
Transparency & Security:Transparency & Security: Rigorous MonitoringRigorous Monitoring
Regulatory controls
Compagnie de Financement Foncier operates under the French BankingAuthority’s control,
Two independent auditors regularly audit all company accounts.
Specific Controller, dedicated teams and systems specialised in :
Overcollateralisation certificates and issuance programmes,
Computing for validation of controls and loan characteristics,
Banking ALM for control of interest rate risks,
Legal aspects,
Revaluation of the assets underlying mortgage loans.
8
>>> Compagnie de Financement Foncier is a subsidiary of Crédit Foncier, Groupe Caisse d’Epargne, France’s third largest banking group.
A robust and transparent balance sheet ( at June 30,2006)
Key Figures (1/2)Key Figures (1/2)
ASSETS (EUR Billion) LIABILITIES (EUR
Billion)
Mortgage loans 17.3 Obligations foncières 56.8
Loans to public entities 19.4 Other resources with
privilege1.9
Securitisation Units (RMBS) 13.9
Other eligible outstanding loans
2.2
Replacement securities 11.5 Subordinated debts and
capital 5.6
TOTAL ASSETS 64.4 TOTAL LIABILITIES 64.4
9
Indicators and performance at June 30, 2006
Key Figures (2/2)Key Figures (2/2)
LTV ratio 51.8 %
Overcollateralisation108.6 %
Net incomeEUR 28.5 M
10
Our Strength: Differentiation
in the Covered Bond Market
11
A transparent structure with a unique business modelA transparent structure with a unique business model
Eligibleassets
SubordinatedDebt & Capital
Obligations Foncières
Derivatives (swaps)
Mortgage loans
Public loans
Bonds issued byLocal Authorities
Securitisation
Replacementsecurities
Compagnie de Financement Foncier
Investors
>>> The obligations foncières of the Compagnie de Financement Foncier enjoy the best AAA/Aaa/AAA (stable outlook) ratings from the three Rating Agencies.
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A A stablestable AAA , Aaa, AAA rating AAA , Aaa, AAA rating
>>> Compagnie de Financement Foncier has taken additional commitments to the three Rating Agencies, Standard and Poor’s, Moody’s and Fitch Ratings:
Strengthen its management rules in order to minimise its risks with regard to the regulation in force
Constitute an overcollateralisation greater than the legally required minimum level for a high residual risk coverage
>>> Observance of these commitments allows the obligations foncières of the Compagnie de Financement Foncier, even in a stressed environment, with a cash flow analysis, to be awarded a AAA/Aaa/AAA rating from the three leading Rating Agencies
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Transparency & Security: risk management (1/2)Transparency & Security: risk management (1/2)
>>> Compagnie de Financement Foncier is committed to maintaining overcollateralisation in order to eliminate risk exposure (credit risk, interest rate risk, liquidity risk and currency risk).
Credit risk
Loans : minimum rates of overcollateralisation,
Off-balance sheet operations, according to counterparty ratings.
Interest rate risk
All assets and liabilities on fixed-rate assets are swapped to floating rates,
Limitation of rate gaps (examined quarterly) and duration variances (< two years),
Stress test scenarios : to determine the level of non-privileged debt needed to meet obligations, even in worst case scenarios.
14
Transparency & Security : risk management (2/2)Transparency & Security : risk management (2/2)
Liquidity risk
Maintenance of 1 Year’s equivalent of liabilities in high quality liquid assets,
Maintenance of sufficient cash to cover the total daily debt maturities.
Currency risk
No open positions,
All transactions swapped to euros.
>>> Strict management rules which ensure risk control and total transparency of financial information.
>>> Structured AAA/Aaa/AAA rating by the three major Rating Agencies (Stable outlook
15
High Quality Assets
16
Other eligible assets EUR2.23
bn
Loans to public entities EUR
19.43 bn
AAA State guarantees from
the European Economic Area
EUR 2.18 bnLoans guaranteed by
the French State EUR 8.74 bn
Securitisation units EUR 13.91
bn
Mortgage loans/ first-rank
guarantee EUR 6.42 bn
Replacement securities
EUR 11.48 bn
13.6%
30.2%
3.4%
21.6%
9.9%
3.5%
17.8%
A portfolio of high quality assetsA portfolio of high quality assets
EUR 64.4 bn
Breakdown of assets at June 30, 2006
>>> The quality of the assets results from the law on the société de crédit foncier as well as Compagnie de Financement Foncier’s extensive expertise.
>>> Loans guaranteed or granted to public entities represent more than 47% of total assets,
>>> Pure mortgage loans < 10%.
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An Investor Focused Funding Approach
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Four pillars of developmentFour pillars of development
Benchmarks
• In EUR or USD • Market making by at least 5 major banks per
benchmark
• Taps of existing benchmark issues give liquidity on the secondary market
• Ability to adapt to dynamic investor demand: currencies and structures
• Development of liquid yield curves in non-euro currencies :
AUD, CHF, GBP, JPY, CAD
Taps
Private Placements
Other Currencies
EUR 6.9 bn in obligations foncières issued year to date
19
Recognised Issuing policy (1/2)Recognised Issuing policy (1/2)Swap spread performance 5Y
-10
-5
0
5
Jan-05 Jan-06 Jan-07
Le
ve
l v
s.a
sw
(b
p)
-10
-5
0
5
Pfandbriefe 5YObligations Foncières 5Y
Cédulas Hipotécarias 5Y
20
Recognised Issuing policy (2/2)Recognised Issuing policy (2/2)Swap spread performance 10Y
-10
-5
0
5
10
Jan-05
Jan-06
Jan-07
Le
ve
l v
s.a
sw
(b
p)
-10
-5
0
5
10
Pfandbriefe 10Y
Obligations Foncières 10Y
Cédulas Hipotécarias 10Y
21
Liquid Euro Benchmark curveLiquid Euro Benchmark curve
EUR Yield Curve
0
1
2
3
4
5
6
nov 07
jan 08
juin 08
oct 08
jan 09
oct 09
feb 10
jun 10
jul 11jan 12
oct 12
mar 13
jan 14
feb 15
jan 16
jan 17
oct 17
may 18
oct 21
- apr 55
Maturity
Issu
e A
mo
un
t (b
n €
)
2007
2006
Prior to2006
>>> 20 Euro Benchmarks, with maturities from 2007 to 2055 a total of 38.15 bn €
>>> Regular taps of existing benchmark issues ensure liquidity.
Total : € 38.15 bn
Total : USD 6.25 bn(4.8 bn € equivalent)
USD Yield Curve
0
0,5
1
1,5
Nov 07 Aug 08 Jan 09 Mar 09 June 09 Feb 10
Maturity
Issu
e A
mo
un
t (U
SD
bn
)
2007
2006
Prior to2006
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Currency diversification: Liquid Public IssuesCurrency diversification: Liquid Public Issues
Total : GBP 1.7 bn
(2.55 bn € equivalent)
Total : CHF 3.68 bn
(2.33 bn € equivalent)
Total : JPY 150 bn
(1 bn € equivalent)
Total : 1.2 bn AUD
(0.6 bn € equivalent)
GBP yield curve
Total : CAD 300 bn
(0.20 bn € equivalent)
300
425
325 350
300
dec 07 may 11 dec 12 jan 14 jan 27
CAD yield curveEuro CAD (M)
100
200
Mar 08 Jun 12
AUD yield curveKangaroo program (A$ 5bn)
250200
750
Feb 10 Sep 15 Jan 17
CHF yield curve
375
900
200
300350
500
600
450
Dec 06 Jun 09 May 11 Apr 12 Oct 14 Nov 16 Aug 18 Feb 31
JPY yield curveEuro Yen (Md)
50 50 50
Mar 10 Jan 11 Dec 11
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USD 1 000 000 000
5.5% Maturity 2009
3 y-r Issue
USD 1 000 000 000
5.5% Maturity 2009
3 y-r Issue
An internationally recognised issuance policy (1/2)An internationally recognised issuance policy (1/2)
>>> Selected transactions in 2006
Geographical distribution
Europe11%
Others4%
Asia50%
Scandinavia35%
Central banks
Investor placement
57%Pension funds
31%
Asset managers
8%
Others
1%Banks
3%
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An internationally recognised issuance policy (2/2)An internationally recognised issuance policy (2/2)
>>> Selected transactions in 2006
EUR 1 250 000 000
3.75% Maturity 2010
3 y-r Issue
EUR 1 250 000 000
3.75% Maturity 2010
3 y-r Issue
Geographic distribution Investor placement
Central Bank44%
Banks13%
Insurance7%
Asset Managers
36%Asia26%
Scandinavia22%
France33%
GermanyAustria
4%
Ireland/UK6%Italy
1%
Other8%
25
EUR 1 000 000 000
3.875% Maturity 2055
50 y-r Issue
EUR 1 000 000 000
3.875% Maturity 2055
50 y-r Issue
Compagnie de Financement FoncierCompagnie de Financement Foncier:: an Innovative Issueran Innovative Issuer
>>> The transaction is the second AAA reference in euro after the French OAT 2055 launched in January 2005. It confirms Compagnie de Financement Foncier’s place as a leading issuer of obligations foncières and strengthens its position as one of Europe’s AAA issuers able to access the longest maturities.
UK (36%)
Switz.(2%)
Austria (1%) Asia
(1%)
Spain (3%)
Lux. (2%)
Ireland (5%)
Netherlands
(7%)
Germany
(8%)
France (10%)
Scandinavia (23%)
Banks (32%)
Asset Managers (25%)
Insurances (17%)
Hedge Funds (5%)
Central Banks (6%)
Pension Funds
(15%)
Italy (2%)
Geographic distribution Investor placement
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Funding PolicyFunding Policy Year 2006
>>> Objective : Eur 15 bn
>>> Eur 17.26 bn in issuance
Public issues : 12.93 bn
Private placement : 4.33 bn, 54 issues,average size per issue : EUR 80.23M
2006 Private placement by structures
2007 Year to date
>>> Objective : Eur 22-25 bn
>>> Eur 6.90 bn in issuance
Public issues : 6.18 bn
Private placement : 0.72 bn, 7 issues ,average size per issue : EUR 44.43 M
2007 Private placement by structures
Switchable1,4%
FRN53,8%
Inflation Linked6,1%
CMS Linked18,3%
Fixed Rate19,1%
Partly Paid1,4%
FRN5,6%
CMS Spread2,1%
Range Accrual
3,9%
Index Linked0,2%
Callable2,1%
Switchable8,5%
Partly Paid1,2%Zéro coupon
0,7%
CMS Link4,5%
Rev. Floater4,3%
Fixed Rate67,2%
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Private Placement:Private Placement: A pillar of our funding policyA pillar of our funding policy
A strong activity in the private placement market
CSA signed with 26 counterparties
2 different formats to issue: EMTN and AMTN program
A wide range of currencies (AUD, CHF, YEN, HKD, USD, GBP, ZAR) all issues are swapped vs. 3 months euribor
An ability to respond to a wide spectrum of structures
Requested by the market
A strong reactivity of CFF and a regular flow of issuance
A capacity to issue across all maturities
INVESTOR ORIENTED ISSUANCE POLICY
FLEXIBILITY
ADAPTABILITY
STRONG PRESENCE
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EUR 715M
CMS Linked
Maturity : 06/08/2024
EUR 715M
CMS Linked
Maturity : 06/08/2024
EUR 44M
RA European Inflation
Maturity : 27/03/2012
EUR 44M
RA European Inflation
Maturity : 27/03/2012
EUR 2 056M
Tec 10 Linked
Maturity : 25/07/2020
EUR 2 056M
Tec 10 Linked
Maturity : 25/07/2020
BRL 300M (EUR 107M)
11.16%
Maturity : 08/02/2008
BRL 300M (EUR 107M)
11.16%
Maturity : 08/02/2008
EUR 50M
Partly Paid
Maturity : 29/05/2021
EUR 50M
Partly Paid
Maturity : 29/05/2021
EUR 221.8M
Multi Index Linked
Maturity : 25/02/2013
EUR 221.8M
Multi Index Linked
Maturity : 25/02/2013
EUR 342M
French CPI Linked
Maturity : 17/02/2015
EUR 342M
French CPI Linked
Maturity : 17/02/2015
ZAR 565M (EUR 58M)
8.97%
Maturity : 12/10/2007
ZAR 565M (EUR 58M)
8.97%
Maturity : 12/10/2007
EUR 20.4M
3.25% Amortising
Maturity : 30/12/2044
EUR 20.4M
3.25% Amortising
Maturity : 30/12/2044
AUD 20M (EUR 11.7M)
FRN Range Accrual
Maturity : 29/10/2010
AUD 20M (EUR 11.7M)
FRN Range Accrual
Maturity : 29/10/2010
EUR 115M
FRN Range Accrual
Maturity : 16/03/2026
EUR 115M
FRN Range Accrual
Maturity : 16/03/2026
CHF 150M
CMS Linked
Maturity : 21/03/2014
CHF 150M
CMS Linked
Maturity : 21/03/2014
Private Placement Structured IssuesPrivate Placement Structured Issues
29
Private Placement :Private Placement : 2006 Report2006 Report
TRENDS
The most popular structures: CMS link & switchable Increase in vanilla fixed rate interest. No real driving interest for
complex structures. Increasingly requested structures for inflation, equity, new interest
rate structure (switchable)
REGULATORY DEVELOPMENTS
IFRS standards redefine the accounting treatment of structured products
30
Private Placement:Private Placement: Strategy for 2007Strategy for 2007
Total funding Eur 22 bn, including 25% of private placement (Eur 5.5bn).
Interest rate linked. Equity linked. Exotic currencies (SEK, NOK, BRL, ZAR, TRY, HUF…). Multi callable transactions.
Marketing approach to investors. Dynamic policy on diversified underlyings. More reactive buyback and restructuration strategy.
Minimum size : Euro, USD 10M, Yen 1Bn. Minimum maturity : 1 year. Non call period : 6 months.
OBJECTIVES
ABILITY IN TERMS OF STRUCTURES
STRATEGY
ISSUING RULES
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Appendix
32Market-Making Agreement Market-Making Agreement for Jumbo for Jumbo Obligations FoncièresObligations Foncières
Jumbo obligations foncières issues of at least EUR 500 million, quoted on at least two European markets and which have obtained the rating of at least 2 rating agencies
At least three market-makers per issue, who undertake to quote firm buy and sell prices throughout the life of the issue
Market-making commitment for amounts of EUR15 million
Bid/Ask spreads of between 5 and 20 bp, depending on the remaining life of the issue
A specific quotation page (details of the issue, price, spreads, etc)
Repo facilities for issues exceeding EUR1 billion
>>> This general agreement has been signed by more than 20 banks
33
Issuer InformationIssuer InformationEUR 75,000,000,000
Euro Medium Term Note ProgrammeEuro Medium Term Note Programmefor the issue of Obligations Foncières
Offering circularOffering circular: August 2006
CurrenciesCurrencies: EUR, USD, HKD, CHF, GBP, JPY, CAD.
Permitted maturityPermitted maturity: from one month
Minimum denominationMinimum denomination: EUR 1,000
Governing lawGoverning law: French law
Arranger Arranger Deutsche Bank
DealersDealers
Crédit Foncier de France
ABN AMRO
IXIS CIB
Merrill Lynch International
Barclay’s Capital
Crédit Suisse
Société Générale CIB
BNP Paribas
Dresdner Kleinwort
Morgan Stanley
Nomura International
Calyon CIB
HSBC
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ContactsContacts
Christophe FRANKELManaging DirectorHead of Financial MarketsChristophe.frankel@creditfoncier.fr
Nathalie MICHELExecutive DirectorHead of Private Placements +33 1 57 44 92 28nathalie.michel@creditfoncier.fr
Paul DUDOUITManaging Director Head of Long Term Funding +33 1 57 44 80 12paul.dudouit@creditfoncier.fr
Sean SMATTDirector Public Issuance +33 1 57 44 92 08sean.smatt@creditfoncier.fr
Thibaut BIENAIMEPublic Issuance +33 1 57 44 92 17thibaut.bienaime@creditfoncier.fr
Arnaud MAURIN Private Placements +33 1 57 44 98 89Arnaud.maurin@creditfoncier.fr
Sandrine GUERINDeputy CEOsandrine.guerin@creditfoncier.fr
Anne SADOURNYInvestor Relations +33 1 57 44 72 27anne.sadourny@creditfoncier.fr
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DisclaimerDisclaimerThis document shall not be considered as an invitation to invest. It should in no event be considered as a solicitation of business or a public issue and does not constitute an offer to buy, sell, subscribe, or provide financial services. It should also not be considered as a recommendation or a solicitation to buy or sell of obligations foncières or any other investment product.
This information is provided "as is", and is for information purposes only. It has nonetheless been supplied by sources that are deemed to be reliable.
Compagnie de Financement Foncier endeavors to ensure that the information is accurate and up-to-date, and reserves the right to make corrections to the content at any time, without prior notice. It is not however in a position to guarantee that such information is complete. It moreover refuses all responsibility in the event of any mistake or omission relating to such information.
You hereby acknowledge that the use and interpretation of this information requires specific and in-depth knowledge of financial markets.
Compagnie de Financement Foncier and its contributors refuse any responsibility in relation to the use that could be made of the financial information contained in this document and the possible consequences of such use, in particular as regards decisions made or actions taken on the basis thereof. In this respect, you shall remain solely responsible for the information and results obtained on the basis of this information. Additional information regarding this presentation will be furnished upon request.
Compagnie de Financement Foncier
4, Quai de Bercy
94224 Charenton cedex
France
www.foncier.fr
15 mars 2007
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