Rating Action: Moody's affirms the Aa2 long-term debt and deposit ratings of Caisse Des Depots et Consignations; outlook stable

Global Credit Research - 07 Dec 2020

Paris, December 07, 2020 -- Moody's Investors Service (Moody's) today affirmed the Aa2 long-term senior unsecured debt and deposit ratings of Caisse des Depots et Consignations (CDC). The outlook remains stable. CDC's short-term deposit and Commercial Paper ratings of Prime-1 were also affirmed.

A full list of affected ratings can be found at the end of this press release.

RATINGS RATIONALE

Moody's considers that CDC is a Government Related Institution ("GRI"). From a credit risk profile perspective, the governance structure of CDC as well its missions and modus operandi reflect CDC's close ties with the French State. Therefore, CDC's ratings are aligned with the rating of the Government of France (Aa2 stable).

While being a separate entity from a legal standpoint CDC supports government objectives and policies at the State's behest. These policies include among other things the investment of regulated savings deposits (notably the Livret A and Livret de Developpement Durable et Solidaire accounts) in long-term projects (e.g., social housing), the collection of regulated deposits (e.g., from notaries) as well as the custody service for the French social security agency. CDC's importance in supporting government policies has been reinforced by the creation of the Banque Publique d'Investissement (BPI France), an institution that finances and invests in the capital of French small and medium-size enterprises (SMEs) and large corporations. BPI France's joint shareholders are CDC and the French state.

CDC's importance as a government agency was further reaffirmed on 4 March 2020 by (i) the transfer from the State and the CDC to the French post office (La Poste) of their respective stakes, approximately 1.1% and 40.9% of the capital of CNP Assurances (CNP, A1 IFSR Stable) paid, as part of a capital increase, by allocation of La Poste shares to the State and to CDC; and (ii) the acquisition by CDC, from the State, of an additional stake in La Poste's capital of nearly E1 billion. Pursuant to these transactions, CDC holds 66% of the capital and voting rights in La Poste. At the same date the transfer from La Poste to La Banque Postale (LBP, La Poste's banking subsidiary) of all CNP Assurances shares, received from the State and from the CDC, paid by a capital increase from LBP, led to the creation of a financial conglomerate within La Poste, with LBP now holding 62.1% of CNP's capital. Further, on 30 September 2020, the equity stakes of the French government and LBP in SFIL (75% and 5%, respectively) were also transferred to CDC (with the exception of one ordinary share retained by the French State), reinforcing CDC's role as the main financier of French local and public authorities. CDC is now the ultimate parent of a large public financial conglomerate, concentrating a large amount of the State's strategic investments.

Furthermore, the French government's role in the appointment of CDC's senior management, in its oversight and strategic decisions, are strong evidence of the intrinsic operational and financial ties between CDC and the French State. CDC is a public-sector financial institution ("Etablissement Public") with a specific status (sui generis) derived from a law dating from 28 April 1816. Although there is no explicit guarantee on its debt, CDC is not subject to liquidation laws (articles L. 631-2 and L. 640-2 of French Commercial Code), while its creditors have ultimate recourse to the French State (Law 80-539 enacted on 16 July 1980).

OUTLOOK

The outlook is stable, in line with the outlook on the rating of the French government. Like other European countries, France is heavily affected by the coronavirus outbreak. Moody's assumes that the pandemic will have a significant, but ultimately transitory impact on France's economy and fiscal metrics.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

Upward pressures on the rating of the government of France, and in turn on CDC's, are limited at this stage. While unlikely in the short term, the outlooks could return to positive and the ratings ultimately upgraded if France's fiscal and debt metrics were to improve materially given more significant structural measures on the State's spending policies.

A downgrade is unlikely, as evidenced by the stable outlook currently assigned to the government of France's, and in turn CDC's, long term ratings. However, both ratings would come under downward pressure if the reforms implemented since 2017 were to be reversed over the coming years with materially negative medium-term implications for growth, or if the unavoidable temporary increase in the budget deficit and debt ratio's trajectory due to the coronavirus outbreak were not corrected again over the coming years. Additionally, should Moody's perceive a weakening in CDC's operational or financial integration with the French State, the long-term ratings could be downgraded.

LIST OF AFFECTED RATINGS

Issuer: Caisse Des Depots et Consignations

..Affirmations:

....Long-term Bank Deposits, affirmed Aa2, outlook remains Stable

....Short-term Bank Deposits, affirmed P-1

....Short-term Deposit Note/CD Program, affirmed P-1

....Long-term Issuer Rating, affirmed Aa2, outlook remains Stable

....Senior Unsecured Regular Bond/Debenture, affirmed Aa2, outlook remains Stable

....Senior Unsecured Medium-Term Note Program, affirmed (P)Aa2

....Commercial Paper, affirmed P-1

....Other Short Term, affirmed (P)P-1

..Outlook Action: ....Outlook remains Stable PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Government-Related Issuers Methodology published in February 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1186207. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Roland Auquier Vice President - Senior Analyst Financial Institutions Group Moody's France SAS 96 Boulevard Haussmann Paris 75008 France JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Alain Laurin Associate Managing Director Financial Institutions Group JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Releasing Office: Moody's France SAS 96 Boulevard Haussmann Paris 75008 France JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454

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