French local sub-sovereign borrowers - market, market potential and expected developments - Jean Christophe 31.03.2020
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French local sub-sovereign borrowers - market, market potential and expected developments - Jean Christophe 31.03.2020 1
We want to be the CAPVERIANT will enable more investors to gain access to municipal financing, thereby ensuring long-term financing and leading platform for investment opportunities for the municipal sector the financing of public We offer additional services and thus become a one-stop-shop investment in Europe. We use information to make the market more transparent, efficient and sustainable. 2
Market administrative structure 32 Universtiy / Regional État hospitals (CHR, CHU) 18 Régions 511 Mid-sized hospitals (CH) 101 Départements 90 Psychiatric hospitals 1.250 EPCI 334 Local hospital (HL) 35.250 Communes 17 other healthcare entities Administrative state building Structuring of the French * add’l: 83 communes d’outre-mer public hospital market 3
Market sizing / shares State; €1.905 bn Hospital; €30 bn LRG; €150 bn pbb; 2,99% Other commercial Socété Générale Other commercial banks Crédit Mutuel banks; 1,95% 3% 2% ARKEA; 8,41% Bonds; Crédit Mutuel ARKEA 13,40% EIB; 6% 5% Bonds Crédit Agricole & 18% CA-CIB; Crédit Agricole & CA-CIB 9,66% Caisse des Dépôts; 14% 4,4% Caisse des Dépôts Groupe BPCE; LRGs AFL; Hospitals 18% 10,15% 5,10% Groupe BPCE 13% Other public banks; La Banque Postale; 1,60% Socété Générale; La Banque Postale Other public banks 22,80% 13,55% 24% 3% • New debt in 2019 – LRG €14.3 bn and Hospitals around €2 bn • 5 lenders representing 65% of the total financing need • Stable LRG debt ratio since 2016 – around 8.5% of FRA GDP • Certain banks are restricting their borrowing more tightly • Strong demand from borrowers for new lenders Source: Market studies from Finance Active, Report on public local debt, 2019; Observatoire des finances locales, End 2018 4
Market pricing 1,6 Margins evolutions for 15 to 20y maturity loans vs. Mid-Swap (MS) Maturity per type of lender 1,4 (source: FCL Gérer la Cité) 80% 1,2 70% 1 60% 0,8 50% 0,6 40% 30% 0,4 20% 0,2 10% 0 0% Apr Mai Jun 17 Jul 17 Aug Sep Okt Nov Dez Jan 18 Feb Mrz Apr Mai Jun 18 Jul 18 Aug Sep 17 17 17 17 17 17 17 18 18 18 18 18 18 [10 to 15[ [15 to 20y[ [20 to 25y[ [25 to 30y[ [30 to 40y[ Min-Max margins Average margin Public banks Bonds Commercial banks Loan market pricing 2019 Challenges and opportunities • 70% fixed rate / 30% floating rate • FRA lenders are mainly withdrawing from the strongly requested • Mainly linare amortising loans with drawdown phases maturities (20-40 years). • Margin vs. MS 19 - 135bps LRG / 35 - 156 bps Hospital • High demand for new lenders due to oligopolistic lender structure in FRA • Av. Margin vs. MS 40bps LRG / 65bps Hospital • Further tightening of credit supply through leverage ratio in 2021 • Margins have stagnated since early 2018 • Credit market barely determined by foreign lenders - first mover (or slightly increased on case-by-case basis) advantage • Bonds make up only 10% of the market Source: Market studies from Finance Active, Report on public local debt, 2018; HSBC Report, Jan 2020 5
CAPVERIANT marketplace >75 >25 >€1bn Activ platform users Verified LRGs & Tender volume in FRA in FRA Investors in FRA Ø €30m 20-30 Y Ø 50/103bp Average tender volume Requested Fixed Average spread LRG / in FRA interest rate in FRA Hospital of platform bids in FRA 6
Disclaimer: The information contained in this document does not constitute an offer or a recommendation for the purchase or sale of the product discussed herein or consulting services on the part of Capveriant GmbH, but is exclusively provided for the purpose of product description. Even though the information provided in this document is based upon sources which are considered reliable, no warranty can be assumed for the correctness, completeness or adequacy of such information. Capveriant GmbH do not provide any fiscal, accounting and/or legal advice. Such matters are dependent on the individual circumstances of the Borrower and have to be discussed and clarified by the Borrower with independent advisors and consultants prior to the conclusion of the transaction. In addition, we would like to point out that fiscal, accounting and/or legal treatment may be subject to change in the future. All rates and prices are subject to change. They are provided for information purposes only and are no indicators of market rates/prices. No conclusions as to future rate and price developments can be drawn from rate and price developments seen in the past. Any form of distribution of this document requires our express, prior and written approval. 7
Thank you for your attention and register now on: CAPVERIANT GmbH Parkring 28 11 Rue Saint-Georges 85748 Garching bei München 75009 Paris GERMANY FRANCE Jean Cristophe Philipp Dennis Niederhagen Managing Director Chief Sales Officer jean.christophe@capveriant.com phillipp.dennis.niederhagen@capveriant.com Florence Lavaud Josua Schätz Directeur Général Sales (France) Senior Investor Manager (Germany) florence.lavaud@capveriant.com josua.schaetz@capveriant.com 8
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