French municipal bond agency raises €750m in first issue

9 Apr 15

A local government bond agency formed in France to allow councils to borrow to fund capital projects has successfully completed its first issue, raising €750m for the sector.

The bond from the Agence France Locale was issued at a coupon interest rate of 0.375%.

Publishing details of the transaction, AFL said that there was demand from investors in excess of €1.3bn, with the eventual investors including banks, insurance companies, central banks, asset managers and pension funds.

Around one-fifth of investors (22%) are from France, with significant funds also raised from Germany, Austria and Switzerland (18%), the Benelux countries (17%) and Asian investors (17%). Around 5% of the money came from investors in the UK and Ireland.

Yves Millardet, chair of AFL’s executive board, said the inaugural issue was a significant event for French local government.

‘The main objective of this inaugural transaction was to establish the Agence France Locale signature in international debt capital markets and to make Agence France Locale renowned for its qualities,’ he said.

‘This goal has been successfully reached. Even before the beginning of its credit activity, Agence France Locale demonstrates it is a leading international financial institution.’

Olivier Landel, chief executive of the Société Territoriale, the group of local authorities that formed the agency, said the low price in the inaugural issue meant it would be able to offer loans to councils at excellent rates.

‘Agence France Locale has already received many loan applications from its members and is now ready to make its first loans as from April 2,’ he added.