Financial Issuer: Credit Agricole Group
Around the world For executing a huge, globe-trotting issuance programme with precision and serenity in a turbulent year for French risk, while setting major landmarks in several markets along the way, Credit Agricole Group is IFR’s Financial Issuer of the Year.
Heading into 2024, Credit Agricole Group knew it would have to step up its game to a new level in funding markets, even though it could not have known what political and market surprises lay in store.
Credit Agricole’s annual issuance needs had been rising after the end of the European Central Bank’s targeted longer-term refinancing operations, its pandemic-era liquidity scheme.
That, combined with lending market share gains and the impact of higher interest rates on deposits, increased the group’s funding needs to “a historical high”, said Aurelien Harff, deputy head of medium and long-term funding at Credit Agricole Group, and culminated in one of the largest funding programmes of any FIG issuer.
Over the course of the year, Credit Agricole publicly sold 51 tranches of debt, more than any other European banking group, in a global issuance programme spanning seven currencies from issuing entities in three countries.
The French parent and its insurance, auto leasing and covered bond-issuing subsidiaries are joined in the market by Credit Agricole Italia and Swiss retail lender Credit Agricole next bank – making the Credit Agricole brand a near-constant presence in the markets.
Harff said the high number of tranches reflects a tenet of Credit Agricole’s diversification strategy.
“We try to break down our funding in more issuances so all have benchmark size and are liquid enough for investors, but at the same time optimise the spread and choose the best size for each market,” he said. Credit Agricole very rarely issues €3bn or €4bn-equivalent in one go, preferring instead to sell multiple smaller transactions in different markets, he said.
That policy helped the bank keep a tight rein on costs, supported by favourable cross-currency levels. “All our [international] currency funding this year came at about zero cost [versus euros],” said Laurent Cote, Credit Agricole Group treasurer.
The approach also led Credit Agricole to several notable achievements and important transactions along the way.
Voyager
Take, for example, the Panda market. Credit Agricole has a long association with the market, being the first European G-SIB to issue in the format in 2019. But until 2024, it had sold just Rmb1bn (US$137m) on each of its visits to the market.
The bank moved things up a gear in 2024, pricing a Rmb2.5bn senior preferred in April and raising Rmb4.5bn in July with a deal that pushed the boundaries of the market, being the first dual-tranche and largest Panda bond from a financial institution or European issuer.
Credit Agricole has also been a regular Samurai issuer for many years and was the only European bank to issue twice in yen in 2024, raising ¥227.6bn (US$1.46bn) in total with a mix of senior unsecured and Tier 2 notes.
In contrast, the bank was less established as an issuer of Australian dollars; after a handful of visits in the 2010s it had been absent from the market for several years before returning in 2023 in response to its growing funding needs.
In January 2024, Credit Agricole priced a landmark A$1.75bn (US$1.09bn) two-part senior preferred offering, the largest bank senior unsecured Kangaroo transaction since 2005 – underlining the increasing vitality of the Aussie dollar market and its growing international appeal, underpinned by strong Asian demand to supplement the domestic bid.
Building and nurturing such a broad international investor base is no simple task. The bank held more than 200 in-person meetings with investors in 2024, with multiple visits to the US, Asia and Australia.
The roadshow schedule “is a bit heavy sometimes”, acknowledged Cote. “But it pays off.”
Harder, better, faster
Naturally, however, the bulk of Credit Agricole’s issuance came in its home euro market and the deep US dollar market – where the bank got off to a fast start at the turn of the year.
“In four months at the beginning of the year, we raised €18bn, because funding conditions were favourable, the market was open and diversification costs were neutral, so we issued across currencies and entities very quickly and secured funding,” said Harff.
Early hits included the first Additional Tier 1 of 2024, a €1.25bn perpetual non-call 6.2-year on January 2, which at 6.50% reset euro AT1 coupons to their tightest levels in two years. The bank also decorated each of the euro, US dollar and sterling markets with several tranches of senior debt.
“It was a strategy to be big early in the year due to the geopolitical situation – you never know what could happen,” said Cote, adding that the bank was also cognisant of November’s US presidential election as having the potential to disrupt markets.
The bank could not have foreseen the French legislative election announced by president Emmanuel Macron in June in the wake of European parliamentary elections that delivered big gains for the far-right National Rally party, nor the political instability and OATs selloff that followed.
It did not, however, require a crystal ball to see the unease around the French government deficit that was already evident in OATs, and Credit Agricole considered such risks when frontloading its issuance, securing funding into the first half of the year.
The bank’s final benchmark covered bond of the year came in June, four days ahead of Macron’s announcement of the snap poll. It landed a €500m six-year public sector covered at 30bp over swaps. Its timing proved prescient, as French covereds went on to price at mid-swap spreads as wide as 50bp in the following months.
With the bulk of its funding secured, and with loan origination in France slowing, Credit Agricole shifted its issuance programme into an optimisation mode after the elections.
One more time
On July 16, a week after the second round of voting, it reopened the unsecured market for French banks with a €750m 6.5-year non-call 5.5 social senior non-preferred bond that was more than four times subscribed, nimbly capitalising on a slight tightening of French spreads just before the bank entered a reporting blackout.
Its strategy of capping the deal, sticking to an intermediate tenor and attaching a social label paid off, as it secured a 110bp spread that bankers deemed almost in line with what Credit Agricole would have paid before the political turmoil.
After the summer break, Credit Agricole became the first bank to resume sterling issuance, showing market leadership to come ahead of domestic banks with a £500m long 10-year non-call five Tier 2. It benefited from its first-mover advantage by paying no new issue premium versus secondaries and pricing with no pickup versus theoretical pricing for an equivalent euro bond.
But perhaps the highlight of the bank’s second-half issuance was its US$1.25bn perpetual non-call 10-year AT1 in late September.
Amid highly conducive technical conditions, as investors launched a grab for higher-yielding products, the deal rode a wave of demand to price at a coupon of 6.70% – the second lowest of the year for a European bank AT1 and the lowest in three years for a perpetual non-call 10.
With its 2024 issuance needs met by September, the bank could look back with satisfaction on an eventful year.
ESG issuance adds one more feather to Credit Agricole’s cap. The group was the biggest ESG-labelled bond issuer among European financial institutions in 2024, selling €3.7bn-equivalent across its various entities.
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