Covered bonds: Veolia’s obligations foncières

Veolia Environnement, the French utility, waste management and transport company, has gained permission from the Comité des Établissements de Crédit et des Entreprises d’Investissement (credit institutions and investment firms committee – CECEI) to set up a société de crédit foncier (SCF), the vehicle used under French law to issue obligations foncières.

Since 1999 a modest number of French financial institutions have used the obligation foncier structure to access the European covered bond market. But there is no precedent for corporates using this market. The process of setting up a SCF was "an extremely complicated procedure", according to a spokesperson from Veolia. "When the issue was first raised with the financial authorities, there was puzzlement, followed by a series of very interesting exchanges."

Some might suspect Veolia of formulating the issue purely for novelty’s sake....