Question 1

What is Caffil?

Accepted Answer

Caffil (Caisse Française de Financement Local) is a specialized French credit institution authorized to operate as a société de crédit foncier. It is a wholly-owned subsidiary of SFIL, a French public development bank owned by the Caisse des Dépôts et Consignations (99.99%) and the French State (one share).

Caffil's sole business is refinancing loans to public sector entities through the issuance of covered bonds called obligations foncières. The institution holds a leading position in France in financing public schools, the public healthcare system, and clean public transport infrastructure. As of December 2024, Caffil had approximately €53.5 billion in outstanding covered bonds.

Question 2

When was Caffil founded?

Accepted Answer

Caffil was originally created on December 17, 1998 and received authorization as a société de crédit foncier on October 1, 1999 from the Comité des établissements de crédit et des entreprises d'investissement (now part of ACPR).

The institution underwent a major transformation in January 2013 when it was acquired from the failed Franco-Belgian Dexia banking group. At that time, it was known as Dexia Municipal Agency and was purchased by the newly founded public-sector credit institution SFIL. Following the acquisition on January 31, 2013, Dexia Municipal Agency was renamed Caisse Française de Financement Local (Caffil). This reorganization was orchestrated by the French State to ensure stable financing for French local governments and public hospitals following the Dexia crisis.

Question 3

Where is Caffil headquartered?

Accepted Answer

Caffil is headquartered in Paris, France. The institution's registered office is located at 112-114 Avenue Emile Zola, 75015 Paris.

Question 4

Where does Caffil operate?

Accepted Answer

Caffil operates throughout France, serving all French regions. The institution's cover pool shows the geographical distribution of its assets across France, with the largest concentration in Île-de-France (30.8% of cover assets), followed by Auvergne-Rhône-Alpes (9.8%), Hauts-de-France (8.4%), and Occitanie (8.4%).

While 93.5% of Caffil's cover assets are in France, the institution also holds a small portion of assets in Italy (4.8%), reflecting its European public sector lending scope.

Question 5

What services does Caffil offer?

Accepted Answer

Caffil provides highly specialized refinancing services for the public sector:

Public Sector Refinancing: Caffil refinances loans to French local governments and public hospitals originated by La Banque Postale and Banque des Territoires (via Caisse des Dépôts). These loans support public interest projects including construction of schools, hospitals, sports facilities, and road infrastructure.

Export Credit Refinancing: Since 2013, Caffil refinances large export credits (exceeding €70 million) that carry the unconditional and irrevocable guarantee of the French State. These export credits support major French companies including Airbus, Alstom, and Naval Group.

Covered Bond Issuance: Caffil issues obligations foncières (French covered bonds) to international investors through multiple programs including a €125 billion Euro Medium-Term Notes (EMTN) program and a US$10 billion Medium-Term Securities program. The institution targets annual issuance of €4-6 billion in covered bonds.

Sustainable Finance: As of 2024, sustainable bond formats (green and social bonds) accounted for 33% of Caffil's total bond issuance, financing climate adaptation projects and social programs.

Question 6

What makes Caffil unique?

Accepted Answer

Exclusive Public Sector Focus: Caffil operates under a highly specialized legal framework as a société de crédit foncier, with the exclusive purpose of refinancing public sector loans through covered bond issuance. This specialized status provides unique legal privileges for bondholders.

Legal Privilege for Bondholders: Holders of Caffil's obligations foncières have preferential claims to the institution's assets ahead of all other creditors, making these bonds highly secure. Caffil maintains overcollateralization of at least 20.9% (well above the legal minimum of 5%).

State-Backed Mission: Created and owned by the French State through its public financial institutions, Caffil serves a strategic public policy mission to ensure stable, long-term financing for French local governments, hospitals, and major export projects.

Crisis Resolution Origin: Caffil emerged from the restructuring of Dexia, taking over approximately €10 billion in structured loans to help French municipalities exit risky financial products. Since 2013, Caffil has reduced the stock of sensitive structured loans inherited from Dexia by 86%.

Leading Market Position: Caffil is one of the world's largest covered bond issuers and France's first bond issuer after the French State itself. The institution's covered bonds are eligible as collateral with the European Central Bank and qualify as European covered bonds (premium).

High Credit Quality: Caffil's cover pool consists of 35,674 public exposures with an average exposure of €1.7 million, demonstrating strong granularity. The institution maintains AAA-equivalent credit quality ratings from major rating agencies.

Question 7

What type of financial institution is Caffil?

Accepted Answer

Caffil is a société de crédit foncier, a specialized category of French credit institution regulated under articles L.513-2 through L.513-5 of the French Monetary and Financial Code. This institutional type is specific to France and represents one of the most specialized and regulated forms of credit institutions in the European banking system.

As a société de crédit foncier, Caffil differs from traditional banks in several fundamental ways. It does not accept deposits from the public, does not provide commercial banking services, and has an exclusive statutory purpose limited to refinancing eligible public sector assets through the issuance of obligations foncières (French covered bonds). The institution operates under stringent regulatory supervision by the Autorité de contrôle prudentiel et de résolution (ACPR) and, since November 2014, by the European Central Bank as part of the Single Supervisory Mechanism.

Caffil must contract out its operational management to a third-party credit institution as required by French law, with its parent company SFIL serving in this servicing role. This unique structure separates the refinancing vehicle from operational management, providing additional security for covered bondholders.

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About Caffil in France