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C ompagnie de F inancement F oncier Obligations Foncières

C ompagnie de F inancement F oncier Obligations Foncières. Sandrine GUERIN Deputy CEO, Crédit Foncier. Historical issues. Compagnie de Financement Foncier: Milestones.

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C ompagnie de F inancement F oncier Obligations Foncières

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  1. Compagnie de Financement FoncierObligations Foncières Sandrine GUERIN Deputy CEO, Crédit Foncier

  2. Historical issues

  3. Compagnie de Financement Foncier: Milestones >>>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. 1852 1860 1950 1999 2006 After WWII, Crédit Foncier de France becomes the leader in the social housing sector with State subsidised loans Crédit Foncier de France is created as the first société de crédit foncier and issues its first obligations foncières Leading position on obligations foncières market Issuance of a 50 years maturity € 1 bn obligation foncière Leading lender to local authorities Caisse d ’Epargne acquires Crédit Foncier New legal framework for obligations foncières Compagnie de Financement Foncier is founded

  4. Profile:Compagnie 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: Covered 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: the 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:Rigorous 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. Key Figures (1/2) >>> 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)

  9. Key Figures (2/2) Indicators and performance at June 30, 2006 LTV ratio 51.8 % Overcollateralisation 108.6 % Net income EUR 28.5 M

  10. Our Strength: Differentiation in the Covered Bond Market

  11. A transparent structure with a unique business model Compagnie de Financement Foncier Mortgage loans Eligible assets Obligations Foncières Investors Public loans Bonds issued by Local Authorities Replacement securities Subordinated Debt & Capital Securitisation Derivatives (swaps) >>>The obligations foncières of the Compagnie de Financement Foncier enjoy the best AAA/Aaa/AAA (stable outlook) ratings from the three Rating Agencies.

  12. A stable 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

  13. 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) • 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. A portfolio of high quality assets >>> 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. Breakdown of assets at June 30, 2006 EUR 64.4 bn >>> Loans guaranteed or granted to public entities represent more than 47% of total assets, >>> Pure mortgage loans < 10%.

  17. An Investor Focused Funding Approach

  18. Four pillars of development • In EUR or USD • Market making by at least 5 major banks perbenchmark • 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 Benchmarks Taps Private Placements Other Currencies EUR 6.9 bn in obligations foncières issued year to date

  19. Recognised Issuing policy (1/2) Swap spread performance 5Y

  20. Recognised Issuing policy (2/2) Swap spread performance 10Y

  21. Liquid Euro Benchmark curve >>> 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)

  22. Currency diversification: Liquid Public Issues CHF yield curve 900 425 350 325 600 300 300 500 450 375 350 300 200 dec 07 may 11 dec 12 jan 14 jan 27 Dec 06 Jun 09 May 11 Apr 12 Oct 14 Nov 16 Aug 18 Feb 31 Total : CHF 3.68 bn (2.33 bn € equivalent) Total : GBP 1.7 bn (2.55 bn € equivalent) AUD yield curve Kangaroo program (A$ 5bn) 750 CAD yield curve JPY yield curve Euro CAD (M) Euro Yen (Md) 250 200 200 50 50 50 Feb 10 Sep 15 Jan 17 100 Total : 1.2 bn AUD (0.6 bn € equivalent) Mar 10 Jan 11 Dec 11 Jun 12 Mar 08 Total : JPY 150 bn (1 bn € equivalent) Total : CAD 300 bn (0.20 bn € equivalent)

  23. Investor placement Others Banks 1% 3% Asset managers 8% Pension funds 57% 31% An internationally recognised issuance policy (1/2) >>> Selected transactions in 2006 Geographical distribution Others 4% Asia Europe 50% 11% USD 1 000 000 000 5.5% Maturity 2009 3 y-r Issue Central banks Scandinavia 35%

  24. An internationally recognised issuance policy (2/2) >>> Selected transactions in 2006 Geographic distribution Investor placement Banks Central Bank 13% France Scandinavia 44% 33% 22% Insurance EUR 1 250 000 000 3.75% Maturity 2010 3 y-r Issue 7% Other 8% GermanyAustria Asset Managers 4% 36% Ireland/UK Asia Italy 6% 26% 1%

  25. Compagnie de Financement Foncier:an Innovative Issuer Investor placement Geographic distribution Spain (3%) Hedge Funds (5%) Austria (1%) Asia (1%) Switz.(2%) Central Banks (6%) Banks (32%) Lux. (2%) Ireland (5%) Pension Funds (15%) EUR 1 000 000 000 3.875% Maturity 2055 50 y-r Issue UK (36%) Netherlands (7%) Germany (8%) Insurances (17%) Asset Managers (25%) Italy (2%) France (10%) Scandinavia (23%) >>> 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.

  26. Funding 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 • 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 2006 Private placement by structures Callable Index Linked Partly Paid Zéro coupon FRN 2,1% 0,2% 1,2% 0,7% 5,6% Switchable CMS Spread 8,5% 2,1% Rev. Floater Range 4,3% Accrual CMS Link 3,9% 4,5% Fixed Rate 67,2%

  27. Private Placement:A 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 STRONG PRESENCE INVESTOR ORIENTED ISSUANCE POLICY FLEXIBILITY ADAPTABILITY

  28. Private Placement Structured Issues CHF 150M CMS Linked Maturity : 21/03/2014 EUR 221.8M Multi Index Linked Maturity : 25/02/2013 ZAR 565M (EUR 58M) 8.97% Maturity : 12/10/2007 BRL 300M (EUR 107M) 11.16% Maturity : 08/02/2008 EUR 715M CMS Linked Maturity : 06/08/2024 EUR 115M FRN Range Accrual Maturity : 16/03/2026 EUR 44M RA European Inflation Maturity : 27/03/2012 EUR 2 056M Tec 10 Linked Maturity : 25/07/2020 AUD 20M (EUR 11.7M) FRN Range Accrual Maturity : 29/10/2010 EUR 342M French CPI Linked Maturity : 17/02/2015 EUR 20.4M 3.25% Amortising Maturity : 30/12/2044 EUR 50M Partly Paid Maturity : 29/05/2021

  29. 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 IFRSstandards redefine the accounting treatment of structured products Private Placement :2006 Report

  30. Private Placement:Strategy 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

  31. Appendix

  32. Market-Making Agreement for Jumbo Obligations 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 Information • EUR 75,000,000,000 • Euro Medium Term Note Programme • for the issue of Obligations Foncières • Offering circular: August 2006 • Currencies: EUR, USD, HKD, CHF, GBP, JPY, CAD. • Permitted maturity: from one month • Minimum denomination: EUR 1,000 • Governing law: French law • Arranger Deutsche Bank • Dealers

  34. Contacts Sandrine GUERIN Deputy CEO sandrine.guerin@creditfoncier.fr Christophe FRANKEL Managing Director Head of Financial Markets Christophe.frankel@creditfoncier.fr Paul DUDOUIT Managing Director Head of Long Term Funding +33 1 57 44 80 12 paul.dudouit@creditfoncier.fr Nathalie MICHEL Executive Director Head of Private Placements +33 1 57 44 92 28 nathalie.michel@creditfoncier.fr Sean SMATT Director Public Issuance +33 1 57 44 92 08 sean.smatt@creditfoncier.fr Arnaud MAURIN Private Placements +33 1 57 44 98 89 Arnaud.maurin@creditfoncier.fr Thibaut BIENAIME Public Issuance +33 1 57 44 92 17 thibaut.bienaime@creditfoncier.fr Anne SADOURNY Investor Relations +33 1 57 44 72 27 anne.sadourny@creditfoncier.fr

  35. Disclaimer This 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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