The market recognised the Crédit Agricole Corporate & Investment Bank (Crédit Agricole CIB) covered bond franchise in no fewer than three categories this year. In addition to taking home awards for Best Research and the Best Bank for ESG Issuers, the firm’s guidance helped a standout Novo Banco deal secure Best Pioneering Deal.
The Novo Banco transaction arrived against a backdrop of limited Portuguese covered bond supply, but growing interest in exposure to the country. Just two Portuguese issuers had sold covered bonds in the previous two years. Meanwhile, a positive macroeconomic outlook and stable political environment had put Portugal back on investors’ radar.
“Strong fiscal discipline in the country translated into the solid performance of both the sovereign and the banking sector,” says Avelino Abellás, Head of Financial Institutions DCM for Portugal & Spain at Crédit Agricole CIB. “As a consequence, Portuguese borrowers enjoyed great interest from investors willing to gain exposure to a successful and attractive credit story.”
Novo Banco — the country’s fourth largest bank — had also completed a multi-year turnaround, demonstrated by multiple Moody’s and DBRS rating upgrades in 2023. The lender boasts a highly-conservative, low-risk mortgage portfolio in a domestic market where households have demonstrated remarkable financial discipline compared to other European countries.
“As such, the issuer’s debut covered bond deal had all the necessary ingredients for an irresistible, compelling investment opportunity,” says Abellás, noting that debut was made in the relatively new segment of “Obrigaçoes Cobertas”, the country’s new European Covered Bond Premium Label compliant secured bonds. Over 150 investors placed orders, which reached a massive €4.9bn.
The transaction not only helped draw additional investor attention onto the Portuguese covered bonds market, but provides a valuable reference point for pricing and fair value. “The greater liquidity and wider investor base will help tighten the premium that Portuguese covered bonds pay versus their Sovereign — still one of the most attractive spreads in Europe,” Abellás adds.
Excellence in ESG
In addition to recognising the pioneering Novo Banco transaction, the market also singled out Crédit Agricole CIB for its unrivalled work with issuers on ESG. The bank’s dedicated ESG syndicate has built strong relationships with all the major ESG investors in the market, which enables Crédit Agricole CIB to elicit specific feedback for issuers when required. Covered bond experience across the full ‘value chain’ from syndicate and DCM to research and sustainable banking ensures exemplary coverage for clients
There are of course specific technicalities to covered bonds that require expertise in both the product and the green and social goals of labelled debt. Crédit Agricole CIB excels at providing both. But the firm’s focus on sustainable banking spans the full range of products and touches not just on issuance but also wider priorities for clients.
“Often the discussion we have with clients goes well beyond their green bond framework or plans for the next trade,” says Laurent Adoult, Head of Sustainable Banking for FI and SSA in Europe. “Crédit Agricole CIB advises on regulatory issues, how to communicate strategy, investors’ expectations and ESG ratings. I think the award is recognition of the holistic advice we provide to clients globally.”
Cutting-edge research
Breadth and depth contribute to the third of Crédit Agricole CIB’s covered bond award wins — the best house for research. Florian Eichert, Head of Covered Bond and SSA Research for the firm has more than two decades of experience unravelling the intricacies of the market. “I’ve seen many different markets emerge and new issuers enter the segment,” he says. “That experience allows us to put things into perspective for clients by pointing to previous episodes.”
Crédit Agricole CIB’s research combines the ability to set market events and trends in context with an unparalleled focus on detail. Be it the specifics of an individual issuer, covers pool, country market, investor demographic or ECBC steering committee decision — the firm’s research provides clients with a firm grip on the latest developments.
Eichert emphasises the firm’s focus on client interaction and ensuring constant contact with market participants. “Not only do we have probably the highest number of client interactions but we publish a vast amount of in-depth research,” he says. “We also try to provide as many useful data insights and tools to end clients as possible. So there’s this combination of detailed commentary and the underlying data, which allows users to draw their own conclusions.”