A3LH9X Agence France

Press release
10 December 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY TO ANY U.S. PERSON (AS DEFINED IN REGULATION S OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT”)) OR ANY PERSON LOCATED OR RESIDENT IN THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS (INCLUDING PUERTO RICO, THE U.S. VIRGIN ISLANDS, GUAM, AMERICAN SAMOA, WAKE ISLAND AND THE NORTHERN MARIANA ISLANDS), ANY STATE OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA OR IN ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS DOCUMENT.

Issuance of Deeply-Subordinated Debt Intended to be Recognized as AT1

For the first time since its inception, AFL, the bank for local authorities, has issued a  deeply subordinated debt with the objective to be recognized as Additional Tier 1 capital ("AT1"). This issuance, which increases its own funds by €50 million, aims to support the accelerated growth of AFL in a context where local public investments, particularly for the ecological transition, are expected to increase.

A Major Support to Local Public Investment

The contribution from this issuance of super-subordinated securities, which will be recognized as AT1 once AFL transitions to dual supervision by the ACPR, enables AFL to better meet the financing demands of its member local authorities, whose investment expenditures are significantly increasing in the context of the ecological transition.

To meet the decarbonisation objectives set by the National Low-Carbon Strategy by 2030, French local authorities need to significantly increase their climate-related investments. Estimates made by the Ministry of Finance, the Institut de l’Economie pour le Climat, and the Pisani-Ferry/Mahfouz mission show an additional annual investment range of €11 to €21 billion. These funds are primarily intended for energy retrofitting of public buildings, the development of public transport and soft mobility infrastructure, as well as the promotion of renewable energy sources.

As an illustration, in 2014, at the time of the creation of the AFL Group, local authorities were investing an average of €55 billion annually in capital expenditures. Today, the total need is estimated at around €75 billion, showing a significant increase over this period. However, local authority debt accounts for approximately 8% of France's GDP, a level that has remained stable for the past 20 years.

A Strong Capitalisation

Through this transaction, AFL's strengthens its capitalisation expressed in terms of the "banking" leverage ratio, and thereby benefits from a capital buffer relative to its internal limits.

BNP Paribas was the sole underwriter and structuring adviser for this transaction.

An International and well Diversified Investor Base

The transaction was sold to a small number of institutional investors located in France, Germany and the UK.

Terms of issuance:

• Nominal amount: €50 million
• Coupon: 7%
• Coupon Payment: Optional cancellation, at the issuer’s discretion, and mandatory at the request of the ACPR after recognition of the instrument as Additional Tier 1; non-cumulative
• Maturity: Undated
• Call Option by AFL subject to ACPR prior approval after recognition of the instrument as Additional Tier 1: 7 years (as well as each day during the period of 6 months preceding this date); then annually on each interest payment date
• Nominal amount reduction triggered if CET1 solvency ratio falls below 5.125%
• Reinstatement option after recognition of the instrument as Additional Tier 1
• Documentation: Stand-alone
• Société Territoriale Guarantee and Member Guarantees: Not applicable
• Expected Rating by Standard & Poor’s at issuance: A-: https://www.capitaliq.spglobal.com/web/client#ratingsdirect/creditResearch?rid=3293312
• Underwriter and structurer: BNP Paribas
• Paying Agent: BNP Paribas

About AFL

“The Company’s mission is to embody a responsible finance to strengthen the local world’s empowerment so as to better deliver the present and future needs of its inhabitants.”

By creating our bank, the first one that we own and manage, we, French local authorities, have decided to act to deepen decentralization. Our bank, Agence France Locale (AFL), is not a financial institution similar to any other. Created by and for local authorities, it aims to strengthen our freedom, our ability to develop projects and our responsibility as local public actors. Its culture of prudence spares us from the dangers of complexity and its governance from downward slides of conflicts of interest. The main objective is to provide local world with an access to cost-efficient resources, under total transparency. The principles of solidarity and equity drive us. We are convinced that together we go further. We decided that our institution would be agile, addressing all types of local authorities, from the largest regions to the smallest municipalities. We see profit as a means to maximize public spending, not as an end goal. Through AFL, we support a local world committed to take up social, economic, and environmental challenges. AFL strengthens our empowerment: to carry out projects in our territories, today and tomorrow, to the benefits of the inhabitants. We are proud to have a bank whose development is like us, even more responsible and sustainable. We are Agence France Locale.

Press contact
Justine GUIGUES – Press Relation Officer
justine.guigues@afl-banque.fr
+33 6 74 94 29 66

IMPORTANT LEGAL INFORMATION AND CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements. Although AFL Group believes that these statements are based on reasonable assumptions as of the date of this press release, they are inherently subject to risks and uncertainties, relating in particular to the impacts of the war in Ukraine and the resulting economic crisis, which may cause actual results to differ from those indicated or implied in these statements.

This press release does not constitute a recommendation concerning any issue of securities. Potential investors should consult a professional adviser as to the suitability of the Notes referred to herein for the person concerned.

This press release and the information it contains may not be published, released, forwarded, transmitted or distributed, directly or indirectly, in or into the United States (including its territories and dependencies) or to any U.S. Person (as defined in Regulation S under the U.S. Securities Act of 1933) or any person located or resident in the United States. This press release is not an offer of AFL securities to sale in the United States. AFL's securities may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or unless pursuant to an applicable exemption from the registration requirements of the Securities Act. AFL does not intend to register its securities in the United States or to make a public offering in the United States.

This press release is an advertisement and not a prospectus for the purposes of Regulation (EU) 2017/1129 of June 14, 2017 (as amended, the “Prospectus Regulation”) and Delegated Regulation (EU) 2019/979 of March 14, 2019, as amended. Investors in the European Economic Area (“EEA”) who wish to obtain information on the terms and conditions of the Notes, and determine whether or not they may, and wish to, subscribe thereto are urged, before making an investment decision in order to fully understand the potential risks and rewards associated with the decision to invest in these securities, to read and refer exclusively to the information memorandum that will be published on AFL’s website (https://www.agence-france-locale.fr/en/page-investisseurs_eng/). This information memorandum will not be subject to approval by any market authority.

The Notes referred to herein are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to, and no action has been or will be undertaken to offer, sell or otherwise make available any Notes, to any retail investor in the EEA. For the purposes of this provision: (a) “retail investor” means a person who is one (or more) of the following: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID II”); or (ii) a customer within the meaning of Directive (EU) 2016/97, as amended, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; and (b) the expression “offer” includes the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes, as applicable. Consequently no key information document required by Regulation (EU) No. 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Notes, or otherwise making them available, to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.

This press release is not a prospectus within the meaning of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (the “UK Prospectus Regulation”) and has not been approved, filed or reviewed by any regulatory authority of the United Kingdom (“UK”). This press release has not been approved by an authorized person for the purposes of Section 21 of the Financial Services and Markets Act 2000, as amended (the “FSMA”). Accordingly, this press release is not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of this press release is exempt from the restriction on financial promotions under Section 21 of the FSMA on the basis that it is only directed at and may only be communicated to (1) investment professionals as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the “FPO”), (2) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the FPO, and (3) persons outside the United Kingdom (together being referred to as “relevant persons”), and must not be acted on or relied upon by persons other than relevant persons. Any investment activity referred to in this press release is available only to relevant persons and will be engaged in only with relevant persons.

The Notes referred to herein are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to, and no action has been or will be undertaken to offer, sell or otherwise make available any Notes, to any retail investor in the UK. For the purposes of this provision a “retail investor” means a person who is one (or more) of the following: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (the “EUWA”); or (ii) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client as defined in point (8) of Article 2 of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA;. Consequently no key information document required by Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of the EUWA (as amended, the “UK PRIIPs Regulation”) for offering or selling the Notes, or otherwise making them available, to retail investors in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.

Attachment

• 2024.12.10.CP_AFL_émission_AT1_EN

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