France’s Caisse des Dépôts eyes social bonds as green deal opens up “new frontiers”

€156bn giant institution plans major sustainability bond programme

France’s Caisse des Dépôts et Consignations has said it will start to issue social bonds, just days after selling its first green notes.

The €156bn public sector financial institution issued a €500m green bond last week to finance real estate, renewable energy and the rehabilitation of polluted and industrial land. The five-year deal is part of a wider, €20bn financing programme and saw pricing tighten to 12 basis points above the OAT, the French treasury bond, on the back of high demand. The coupon, or interest rate, is 0.2%.

“I don’t know if the fact it was a green bond gave it a premium,” said Frédéric Bonnardel, head of issuance at Caisse des Dépôts. “But I think in the context of high volatility in the current markets, clearly it helps to stabilise the price.”

The bond was assessed by Vigeo Eiris and the banks were BNP Paribas, Crédit Agricole, HSBC, JP Morgan, NATIXIS and Societe Generale. Caisse des Dépôts’ existing auditor, Mazars, will audit the bond to ensure that future projects comply with the bond’s eligibility criteria, according to Bonnardel.

But the green bond is just the start of what is set to be a much bigger sustainability bond programme, which will see the agency issue themed ‘use of proceeds’ deals regularly, in different formats, Bonnardel told RI.

“We plan to issue around €4bn each year through public benchmarks and private placements,” he explained.“We are looking at the Swiss Franc market, and the GBP [sterling] market, although private placements can be done in any OECD currency.”

The body hopes to issue a benchmark public deal once a year, but adds that this will not always been a green bond. “Certainly [we plan to issue] a public benchmark sustainable or social bond for next year,” he explained. “But we want to issue green bonds in private placements and club deals, because we know that a number of investors are interested in those kind of assets customised for them in terms of maturity. That opens up a new frontier to us: for example, to finance public transportation projects – which are long-life cycle – it could be more convenient to use a longer maturity green bond like 15 or 20 years.”

Caisse des Dépôts operates as the investment arm of the French state. Its balance sheet is separate from the state, but its CEO is appointed by Parliament, its board includes members of parliament and the central bank, and it carries the same credit rating as the state (AA from S&P and Aa2 from Moody’s). It is also legally protected from bankruptcy and insolvency, which Bonnardel describes as “a kind of implicit guarantee from the French state”. It has four explicit priorities, in line with French policy: Territorial Transition, Demographic Transition, Digital Transition and Ecological and Energy Transition.