BNP Paribas announced today the launch of its Euro 25 billion Covered Bond Programme. The programme will allow the bank to raise funding secured on its portfolio of home loans.
Initially comprising Euro-denominated French residential home loans (prime first lien residential mortgages and guaranteed home loans), the programme will be used by the bank to issue both benchmark and private placement transactions allowing for a diversification of its funding sources while taking advantage of the attractive cost of funds available in the covered bond market.
“The addition of a covered bond programme to our existing capital markets issuance programmes will allow investors an ever greater opportunity to purchase obligations linked to specific assets originated by BNP Paribas,” highlights Michel Eydoux, Head of ALM and Treasury at BNP Paribas. “Investors now have the option to purchase senior and subordinated unsecured obligations of the bank as well as obligations linked to our consumer credit, corporate lending, leverage finance and home loan portfolios.”
BNP Paribas is expected to issue several benchmark covered bonds each year with the objective of creating a liquid benchmark curve over the coming years. “We are committed to offering investors one of the most liquid covered bond programmes available in the market,” comments Martine Billeaud, Head of Medium and Long Term Funding at BNP Paribas. “The liquidity and transparency in issuance provided by our covered bond programme will allow investors an additional alternative for their AAA portfolio.”
“This programme highlights BNP Paribas' commitment to the development of the European covered bond market. As a leading underwriter of covered bonds over the past few years, we continue to expand our presence in this strategic market across all related sectors of research, structuring, sales and trading,” notes Derry Hubbard, Head of Covered Bond Marketing and Execution at BNP Paribas. “We expect the programme to raise the profile of the French covered bond sector even further by offering investors another liquid and attractive benchmark curve.”
When discussing the structuring of the programme, Arjan Verbeek, Co-Head of Flow Products Structuring at BNP Paribas, remarks “This programme clearly demonstrates BNP Paribas' ability to structure innovative solutions to meet the needs of both issuers and investors.
While balancing the need to provide flexibility to the issuer and to provide the necessary security that investors normally associate with AAA covered bonds, BNP Paribas' covered bond programme gives a privileged access to one of the best performing home loan markets in Europe.”
Further structural details of the programme will be announced by the bank in the coming days. A pan-European investor roadshow is also being planned to discuss the programme with investors over the coming weeks.
Covered bonds issued under the programme will be rated AAA by Standard & Poor's Rating Services, Aaa by Moody's Investors Service and AAA by Fitch Ratings.
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