Record Low-Yielding French Samurai Is a Hit in Negative World
CDC priced $139 million of three-year notes at a coupon of 0.06%, the lowest level ever for a fixed-rate Samurai note.
(Bloomberg) -- Founded in 1816, France’s Caisse des Depots et Consignations is no stranger to historical change, and on Friday it made a bit of new history in Japan’s Samurai bond market.
CDC priced 15 billion yen ($139 million) of three-year notes at a coupon of 0.06%, the lowest level ever for a fixed-rate Samurai note, according to data compiled by Bloomberg dating back to 1999. Demand for the bond was about three times the issue size, and buyers included banks and casualty insurers, according to underwriters on the deal.
The financial institution, created after the reestablishment of the French monarchy following Napoleon Bonaparte’s defeat at the Battle of Waterloo, is rated higher than the Japanese government. The bond pays a premium of about 25 basis points over the comparable three-year Japanese sovereign note, making it attractive for some investors.
The yield on CDC’s shorter euro bonds when swapped for yen pays minus rates, meaning the Japanese currency note also offer some relative value. The bond is expected to be rated AA by S&P Global Ratings and receive an equivalent grade from Moody’s Investors Service.
CDC has a small amount of diversified investments in currencies including the yen, which it needs to hedge, and it can do so by borrowing in the Samurai market, according to emailed comments from Stephan Haeuw, head of financing at the firm. It also has a Samurai note that needs to be refinanced in July, he said.
While there is no explicit government guarantee on CDC’s debt, its creditors have ultimate recourse to the French State, Moody’s said in a report in June.
--With assistance from Issei Hazama.
To contact the reporter on this story: Shiho Takezawa in Tokyo at stakezawa2@bloomberg.net
To contact the editors responsible for this story: Finbarr Flynn at fflynn3@bloomberg.net, Ken McCallum
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