French Municipal Bank SFIL Will Issue Bonds in Second Quarter
SFIL, created last week by taking over Dexia Municipal Agency, or DMA, plans to issue between 3 billion euros ($4.06 billion) and 5 billion euros of covered bonds this year, Mills told journalists in Paris today. The company will tap bond markets through its fully owned unit Caisse Francaise de Finacement Local, a covered-bond issuer that took over DMA’s 94 billion-euro balance sheet.
Mills, who headed France’s sovereign-debt issuer Agence France Tresor, was picked by Finance Minister Pierre Moscovici to lead the new municipal bank, the country’s centerpiece in funding long-term municipal loans. French cities and local governments, which represent 71 percent of the nation’s public investments, face about 20 billion euros in long-term funding needs in 2013, according to a presentation handed to reporters.
Caisse des Depots et Consignations, the Paris-based state- owned bank, has a 20 percent stake in SFIL and is providing a 12.5 billion-euro liquidity support, according to the presentation. The French state owns 75 percent of SFIL, while La Banque Postale holds 5 percent.
SFIL’s covered-bond unit also has 9.4 billion euros of “sensitive” structured loans with 948 French local governments, out of a total of 20,000 clients, Mills said. While the bank is working at reducing risks from these assets, clients with “sensitive” borrowings are paying about 4 percent on average and “there is a very little minority with high or very high rates,” he said.
SFIL, which plans to have 416 employees in Paris and Lyon, mostly coming from Dexia, currently has a staff of about 200 people, Mills said. The municipal bank will provide refinancing resources for new municipal loans that will be sold by a joint venture between La Banque Postale and Caisse des Depots et Consignations, according to the presentation.
SFIL will also provide the Banque Postale-CDC joint venture, which is still to be created, with services including risk management, accounting and payments, according to the presentation.
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at firstname.lastname@example.org