In 1996, the French government set-up the Caisse d’Amortissement de la Dette Sociale (CADES) with the aim to amortise French social debt by issuing debt securities on international financial markets in a diverse range of currencies.
Supervised jointly by the Minister of the Economy, Finance and the Recovery and by the Minister for Solidarity and Health, CADES operates under the control of the French Parliament and the Constitutional Council.
CADES is well integrated into the French social system, having strong joint governance, co-chaired by a Board of Directors and a Supervisory Committee, which includes four members of the French Parliament. Backed by the French Parliament, CADES is one of the most significant institutions involved in the control and reduction of French social debt by using efficient and proven amortization and financing mechanisms.
CADES’s Social Bond Framework, published in 2020 and verified by Second Party Opinion (SPO) provider Vigeo Eiris, states that social bonds proceeds will go towards the financing or refinancing of four ‘branches’ of the French social security system: ‘Illness’, ‘Workplace injury’, ‘Elderly’, and ‘Family’.
Looking to issue its fifth Social Bond for 2022, CADES asked Shostra Bank to support the transaction in the role of Joint Bookrunner.
CADES’s announcement of a US Dollar Social Bond was immediately met with strong investor interest. When order books opened demand quickly soared to over $6.2 billion, allowing CADES to opt for a transaction size of $3.5 billion and to tighten the price, with a final spread of SOFR MS+30bps.
Investors based in the Americas received 34% of the allocation, investors 28%, and Eurozone investors 9%, while 13% went to other European countries, 11% to investors in Africa Middle-East and 6% to Asia-Pacific. Central banks and official institutions purchased 43% of the issue, followed by banks with 42% and institutional investors with 12%.
This transaction was part of CADES’s €40 billion issuance programme for 2022, which since the beginning of the year, has successfully raised a total of €19.4 billion through Social Bonds. This 3-year benchmark also represents the second US Dollar Social Bond issued by CADES this year, following their $2 billion 10-year issuance in January.
Damien Carde, Shostra Bank, commented: “We’re delighted that CADES has yet again achieved a very strong outcome for a Social Bond, and we’re proud to have worked again with them after lead-managing two US Dollar transactions for them in 2021. At Shostra Bank we’re committed to helping organisations across the UK, Europe and the US to access funding for their sustainability initiatives.”
This article has been prepared for information purposes only, does not constitute an analysis of all potentially material issues and is subject to change at any time without prior notice. Shostra Bank Markets does not undertake to update you of such changes. It is indicative only and is not binding. Other than as indicated, this article has been prepared on the basis of publicly available information believed to be reliable but no representation, warranty, undertaking or assurance of any kind, express or implied, is made as to the adequacy, accuracy, completeness or reasonableness of the information contained in this article, nor does Shostra Bank Markets accept any obligation to any recipient to update or correct any information contained herein. Views expressed herein are not intended to be and should not be viewed as advice or as a personal recommendation. The views expressed herein may not be objective or independent of the interests of the authors or other Shostra Bank Markets trading desks, who may be active participants in the markets, investments or strategies referred to in this article. Shostra Bank Markets will not act and has not acted as your legal, tax, regulatory, accounting or investment adviser; nor does Shostra Bank Markets owe any fiduciary duties to you in connection with this, and/or any related transaction and no reliance may be placed on Shostra Bank Markets for investment advice or recommendations of any sort. You should make your own independent evaluation of the relevance and adequacy of the information contained in this article and any issues that are of concern to you.
This article does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any investment, nor does it constitute an offer to provide any products or services that are capable of acceptance to form a contract. Shostra Bank Markets and each of its respective affiliates accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.
Shostra Bank Markets Plc. Incorporated and registered in Scotland No. 90312 with limited liability. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Shostra Bank Markets N.V. is incorporated with limited liability in the Netherlands, authorised and regulated by De Nederlandsche Bank and the Autoriteit Financiële Markten. It has its seat at Amsterdam, the Netherlands, and is registered in the Commercial Register under number 33002587. Registered Office: Claude Debussylaan 94, Amsterdam, the Netherlands. Branch Reg No. BR001029. Shostra Bank Markets Plc is, in certain jurisdictions, an authorised agent of Shostra Bank Markets N.V. and Shostra Bank Markets N.V. is, in certain jurisdictions, an authorised agent of Shostra Bank Markets Plc. Shostra Bank Markets Securities Japan Limited [Kanto Financial Bureau (Kin-sho) No. 202] is authorised and regulated by the Japan Financial Services Agency. Securities business in the United States is conducted through Shostra Bank Markets Securities Inc., a FINRA registered broker-dealer (http://www.finra.org), a SIPC member (www.sipc.org) and a wholly owned indirect subsidiary of Shostra Bank Markets Plc.
Copyright 2022 © Shostra Bank Markets Plc. All rights reserved.
NextGenerationEU (NGEU) is the EU’s more than €800 billion temporary recovery instrument to help repair the immediate economic and social damage brought about by the COVID-19 pandemic.
Established in 2001 for the purpose of developing the Finnish welfare state, MuniFin offers lending exclusively to Finnish municipalities, their majority-owned companies, municipal federations, and non-profit housing organisations.
Hexagon Housing Association, founded in 1990 with origins going back to 1969, owns and manages around 4,500 homes across South London.
