A word from Jean-Marc Saugier

Over the course of 2019, the central banks announced more accommodating monetary policy measures than anticipated by the markets at the beginning of the year.

In the United States, the Federal Reserve reduced its key interest rates three times, thereby taking the Fed Funds target to between 1.50% and 1.75%.

The European Central Bank restarted its asset purchasing program, which it had ended in 2018, at a monthly pace of €20 billion. It also announced a new long-term refinancing operation (TLTRO III[1]). Furthermore, it reduced the rate on its deposit facility by 0.10% to -0.50% and introduced a two-tier system for remunerating excess reserve holdings with a view to reducing the share of deposits in the banking system carrying negative rates.

The Bank of England’s base rate remained unchanged throughout the year at 0.75%.

The central bank’s change in tone regarding monetary policies had an impact on investor perception of risk and drove the rise in the equity markets[2] and the tightening of credit spreads[3].

Eurozone rates continued to fall until early September, before a partial upturn towards the end of the year. Following a historic low in September of -0.54%, the 5-year swap rate ended the year at -0.10%, 30 bps lower than in December 2018.

RCI Banque issued the equivalent of €2.9 billion in senior public bond format. The group successively launched five and a half years rate issue for €750 million, a dual-tranche issue for €1.4 billion (€750 million on a fixed rate over four years, €650 million on a fixed rate over seven years), and €600 million at a fixed rate over three and a half years. At the same time, the company issued a five-year fixed rate CHF200 million bond, a transaction that enabled it to both diversify its investor base and fund assets in that currency.

In addition, RCI Banque issued a Tier 2 subordinated bond in the amount of €850 million. This 10-year contractual maturity bond can be redeemed after 5 years and strengthens the capital ratio.

On the secured funding segment, RCI Banque issued a public securitization backed by car loans in Germany for €975.7 million, split between €950 million of senior securities and €25.7 million of subordinated securities.

In addition, the group’s entities in Brazil, South Korea, Morocco, Argentina and Columbia also tapped their domestic bond markets.

RCI Bank and Services benefits from diversified sources of funds allowing to finance its growth.