Part of Massive Social Debt Transfer Program

France’s Caisse d’Amortissement de la Dette Sociale (CADES) issued a €5 billion social bond, the largest ever, drawing a record order book for the organization of nearly €16 billion. The offering is the first under CADES’ new social bond program, part of the social debt transfer voted by French Parliament in the summer of 2020.

The 0% coupon bond has a 10-year maturity. Pricing for the offering was set at 99.746%.  Joint-lead book runners for the transaction were BNP Paribas, Crédit Agricole CIB, Natixis and Société Générale.

The bond was placed primarily in Europe, including France (26.8%), Benelux (17.6%), Germany (14.5%), other Eurozone (4.9%), the UK (11.1%) and 5.8% in the rest of Europe, with international investors in Asia (16.9%) and the rest of the world (2.4%) allocated the remainder. By investor classification, Banks purchased almost half of the issue at 45.9%, followed by fund managers at 25.8%, central banks and official institutions at 23%, insurance companies at 2.9% and others at 2.4 %.

Alain Gallois, Global Head of Investment Banking, Corporate & Investment Banking at Natixis said:

“For an issuer with an inherently social purpose such as CADES, this program is designed to offer investors greater transparency and reporting, as these standards become increasingly familiar for them and as part of an ongoing bond of trust. The remarkable success of this transaction truly reflects investors’ confidence in CADES as an issuer, and this trust will clearly be enhanced by this new social bond program. After Natixis structured Unédic’s historic inaugural social bond, this latest success further testifies to our social bond expertise with public sector issuers.”

The French government has established a massive social debt transfer program, allowing CADES to take over social debt of €136 billion euros and extended its lifespan with a repayment end date postponed from 2024 to 2033. The program is targeting €20 billion bond issues before the end of 2020 and €40 billion considered for 2021.

Jean-Louis Rey, Chairman of CADES’ Board of Directors, said:

“Since the start of 2020, the health crisis linked to the Covid-19 epidemic has weighed heavily on social finances. In this context, on the strength of the proven effectiveness of our amortization mechanisms, CADES will be a decisive asset in the absorption of these social deficits and in the sustainability of our social system.”

CADES has selected Vigéo Eiris as a Second Party Opinion provider to assess the transparency, governance and compliance of this social bond framework with the 2020 ICMA Social Bond Principles.