New Issue: Leading French bank issues SGD bonds at 3.05% IPG

Credit Agricole is the second-largest bank in France and is also among the largest retail banking groups in Europe. It is designated as a Global Systematically Important Bank (G-SIB) by the FSB. Credit Agricole plans to issue new SGD 6NC5 senior non-preferred bonds at an initial price guidance (IPG) of 3.05% for accredited and institutional investors only. This issuance is expected to be rated A- / A3 / A+, while the issuer is rated A+ / A1 / A+ by S&P, Moody’s, and Fitch, respectively.

We think this new issuance looks attractively priced relative to similarly rated banking bond peers in the SGD universe. While we continue to prefer Tier-2 banking bonds over seniors, this senior non-preferred issuance may appeal to those who are unwilling to take such subordination risks.

Financial highlights

(Results described below are for Credit Agricole SA [the issuer], and not Credit Agricole Group [parent company]. Credit Agricole SA is a key part of the broader Credit Agricole Group, and we expect their credit profiles to parallel each other.)

Credit Agricole SA (‘Credit Agricole’) delivered €21.1b in revenues and €9.6b in gross operating income in 9M25 (ended 30 September 2025), marking year-on-year (YoY) growth of over +5% for both metrics. Its cost-to-income ratio remained stable at 54.6%. Overall, these mark a continuation from previous quarters, where Credit Agricole delivered decent top-line growth while maintaining disciplined cost control.

Credit Agricole’s business momentum remained healthy across divisions. The bank saw 522k new customers in 3Q25, bringing the year-to-date total to over 1.5 million. Loan growth was solid within its retail division, including both home loans and corporate loans. Other segments like Asset Management and Wealth Management saw increases in assets under management (AUM), while Corporate & Investment Bank (CIB) delivered a record 9-month performance.

While its cost of risk also increased by just 1bps over the quarter, to 35bps (calculated using 4 rolling quarters), Credit Agricole described asset quality as ‘very solid’ overall, with 3Q25 NPL (non-performing loans) ratio stable versus 2Q25 at 2.3%. Overall, Credit Agricole delivered net income of €6.1b in 9M25, marking a strong 9-month period with year-on-year growth of +12%.

Credit Agricole SA reported a CET1 ratio of 11.7% as of September 2025. This was slightly below the 11.9% figure in June 2025, but above management’s medium-term target of 11%; more importantly, this represented a sizeable buffer of 289 bps over regulatory requirements. We think Credit Agricole has a very strong solvency profile.

We also do not expect Credit Agricole to face significant funding issues. It has a strong liquidity position with a liquidity coverage ratio of about 140%. It also has a large pool of customers (37m retail banking), giving it access to a diversified source of deposits; furthermore, we think it can easily tap credit markets for a funding if required, considering its strong credit rating.

Our thoughts on this new issuance

This new issue has an IPG of 3.05%, which we expect will be revised downward for a final price guidance (FPG) in the high-2% region. Hence, investors should expect this new issuance to come with lower yields relative to Credit Agricole’s outstanding 2035 subordinated bonds – ACAFP 4.250% 14Jan2035 Corp (SGD).

The difference in yields is likely due to the higher seniority of this new issuance, which may be more suited to risk-averse investors. While we see greater value in Tier-2 bonds over senior bonds for the former’s yield pickup, risk-averse investors may wish to consider these higher-ranking senior bonds for Credit Agricole.

In addition, this new issuance’s FPG is likely to come in higher than yields offered by ANZ 3.750% 15Nov2034 Corp (SGD) (YTW: 2.57%), which has a similar bond rating. We also compare with some senior non-preferred peers like BNP 3.310% 23May2032 Corp (SGD) (YTW: 2.55%) and SANTAN 2.350% 13Nov2031 Corp (SGD) (YTW: 2.40%), and expect this new issuance to come in with decent or even higher yields for comparable credit quality. To summarise, we think this new issuance looks attractive for risk-averse investors looking for a high-quality bond.

Table 1: Bond comparison (new issue bolded)

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold NIL positions in the abovementioned securities.