Cades. Heard of it? You will have soon. By the middle of this year, Cades is set to become one of the biggest French issuers of international bonds. "It's going to be the best credit in France after the government," reckons Arnaud Gremont, an executive director at Morgan Stanley.
For an organization that plans to raise up to Ffr140 billion ($27 billion) in syndicated loans and bonds this year, Cades has a remarkably low profile. Standard & Poor's has no rating for it; Moody's has never heard of it. The switchboard at the French treasury says it doesn't exist, even though the treasury is responsible for setting it up.
The Caisse d'Amortissement de la Dette Sociale (Cades - pronounced Kad-ess) is part of a package of measures introduced by the French government to eradicate the increasingly unwieldy social security debt. Spending cuts will reduce future borrowing and Cades will take on what has already been spent: the deficit accumulated since 1994 (approximately Ffr60 billion a year) and that projected for 1996 (Ffr17 billion). It aims to pay this off within 13 years. So far the money has been raised in the form of a Ffr140 billion loan from the Caisse des Dépôts et Consignations, due June 28.