Nature of the Company

Nature of the Company

Caisse Française de Financement Local is a French credit institution authorized to operate as a établissement de crédit spécialisé agréé en qualité de société de crédit foncier.

In this role, it conducts specialized transactions that have an exclusive purpose, as defined in articles L.513-2 and following of the Monetary and Financial Code.

In the case of Caisse Française de Financement Local, this specialization is reinforced by its own by-laws and by the July 23, 1999, authorization of the CECEI (Comité des établissements de crédit et des entreprises d’investissement), which limits its activity to transactions with public sector entities or entities they fully guarantee.

They issue covered debt securities called obligations foncières and contract other covered debt, which may or may not be traded on regulated markets, in order to finance the assets.

 All these issues of covered debt are characterized by a legal privilege that in priority allocates the sums from the Company’s assets to serve bond interest and reimbursement.

The asset surplus (assets exceeding obligations foncières and other covered debt), called over-collateralization, is financed by equity and by debt borrowed from SFIL, its sole shareholder. This latter debt does not benefit from the privilege of the law on sociétés de crédit foncier, and is therefore subordinated to the covered debt.

Caisse Française de Financement Local is not allowed to hold any equity interest in other entities.