Euroland Municipal Bonds: New city states
On January 8 1999, as if responding to Ile de France's enthusiastic advocacy of bond issuance by smaller communities, Aubagne (population: 41,187) tapped the euro capital market. The picturesque medieval town near Marseille was apparently well received - it increased its bond from €55 million to €60 million that same morning.
Aubagne is best known as the birthplace of writer Marcel Pagnol, and its surrounding countryside as the setting of his two most famous novels, Jean de Florette and Manon des Sources, later memorably filmed. To French ears, the town's name may suggest sun-baked rustic backwardness. Pagnol noted that one former mayor won the election by being the only guy in town with a telephone.
But this reputation, insists secretary general for finances Alain Vacher, is bogus. Aubagne is an economic hub for the surrounding region, home to many small and medium-size businesses, and a centre for high-tech research.
As a financial actor, it's more experienced than many larger French towns. It has a credit rating of A- from Fitch IBCA, increased from BBB+ in 1998.