Caffil: The Legal Framework at the Heart of Our Activities

Caffil operates within a strict legal framework defined by both French and European regulations. This framework ensures the security, transparency, and robustness of its activities as a specialized credit institution dedicated to refinancing public sector assets.

In compliance with these provisions, Caffil adheres to specific obligations that govern its operations, ensuring responsible management that aligns with the requirements of stakeholders and regulatory authorities.

Purpose: Caffil as a Société de Crédit Foncier

A société de crédit foncier (SCF) is a credit institution authorized as a specialized credit institution by the Autorité de Contrôle Prudentiel et de Résolution (ACPR).

The primary purpose of the SCF is to finance or refinance loans or securities in accordance with Articles L.513-2 and subsequent articles of the French Monetary and Financial Code (CMF).

By its statutes and the approval of the CECEI, the Caisse Française de Financement Local may only hold loans or securities issued by public entities or fully guaranteed by them.

Financing is carried out through the issuance of covered bonds (obligations foncières), which benefit from a legal privilege. Article L. 513-11.

The law : Article L. 513-2 Objet des sociétés de crédit foncier

Assets

According to its statutes and CECEI approval, the Caisse Française de Financement Local can only hold:

• Exposures on public figures or entirely guaranteed by them (Article L. 513-4 and R. 513-2)
• Exposures to or guaranteed by:
  • Credit institutions, investment firms, or portfolio management companies
  • First-tier credit quality exposures (up to 15% of covered bonds and privileged resources)
  • Second-tier credit quality exposures (up to 10%)
  • Third-tier credit quality exposures (up to 8%, for institutions based in an EU or EEA country)

Legal Privilege and Protection

Assets held by an SCF are used to secure the repayment of privileged debts as a priority (Article L. 513-11).

In the event of judicial liquidation, there is no acceleration of debt repayment—privileged debts, including hedging instruments, are repaid according to their original amortization schedule or maturity (Article L. 513-11, paragraph 3).

Furthermore, the parent company’s bankruptcy does not lead to the SCF’s bankruptcy (Article L. 513-20).

Overcollateralization

The overcollateralization ratio of an SCF reflects the gap between the amortization curves of assets and privileged debt issuances. This ratio must be at least 105% (Article L. 513-12 and R. 513-8).

The Caisse Française de Financement Local commits to maintaining this ratio at a level equal to or greater than 105%. This ratio is calculated based on Instruction 2022-I-03 and CRBF Regulation 99-10.

Acquisition of Receivables

Receivable acquisitions allow a secured transfer of assets to the SCF (Article L. 513-13). The acquisition of receivables may be subject to acceptance by the public entity (Article L. 513-14).

Role of the Service Provider

A credit institution manages the SCF’s daily operations on its behalf (Article L. 513-15).

The servicer is authorized to legally represent the SCF in court (Article L. 513-16).

Regulatory Controls

Sociétés de crédit foncier are subject to various regulatory oversight bodies.

Miscellaneous Provisions

To cover cash flow needs, SCFs may deposit their own covered bonds as collateral at the Central Bank, within a limit of 10% of total privileged debt (Article L. 513-26).

Conclusion

Caffil operates within a strict and protective legal framework, ensuring secure, transparent, and sustainable financing solutions for public sector entities. Its activities are regulated and monitored to maintain financial stability, protect privileged creditors, and guarantee optimal refinancing conditions.