IGTA Journal - Summer 2020

At EDF, on the other hand, there are two sources of financing (NEU CP with a ceiling of 6 billion euros, US CP with a ceiling of 10 billion dollars, programmes rated A2 and P2), but this with the aim of optimising financial charges, according to market conditions. "The two markets feed all of the group's cash requirements," explains Alexandre Marie, market operator in the group's treasury financing department. Banks and/or brokers On these over-the-counter markets, issuers rely on intermediaries (placing agents or dealers) who are responsible for placing the securities and animating the secondary market. How is the choice made? Usually, companies entrust this task to their lending banks, a core group to which may be added other banks and/or brokers when the programmes are large and for issues in foreign currencies. Banks can buy the securities for their own account (some do this routinely, others not at all), not brokers. Credit institutions or brokers, placement agents can be more or less efficient depending on the market (NEU CP, Euro CP, US CP). As for the question as to what drives banks to position themselves in the commercial paper niche (several leading institutions have thrown in the towel in recent years), it does not call for a definitive answer: While some explain that margins have greatly decreased and that it is a "service to corporate clients", others argue that thanks to the automation of procedures and high volumes, the business is profitable. Rated or not Another issue that cannot be conclusively decided is whether it is appropriate to have one's programme rated (this is not an obligation for the company if it has securities traded on a regulated market in the European Economic Area or if the programme benefits from a first demand guarantee). This is a case-by-case calculation that takes into account, among other things, the cost of the rating (and the time spent with the agency(ies)), its advantages, access to a wider range of investors, issue price, eligibility of the securities for central bank securities purchase programmes, etc. "As money market fund managers, we are subject to the obligation to carry out an internal rating. We therefore have our own analysis grid about risk. This does not, however, exempt us from closely monitoring rating changes made by the agencies, especially when there is a shift into the speculative category," says Mikaël Pacot, head of Euro money market and interest rate management at Axa Investment Managers. Among the issuers whose programme is not rated is Edenred, a services and payment company that generated €668 million in gross operating income in 2019 and has a €750 million programme (€500 million when it is set up in 2018): "As the company is rated, we did not consider it necessary to have the programme specifically rated", says Olivier Salmon, head of treasury, who explains that his group, which is rather cash-rich, uses this source of financing according to changes in its operating working capital requirements "as a substitute or complement to bank lines". Like other compartments, this over-the-counter market has not escaped the general trend of automating procedures, speeding up operations and squeezing intermediaries. But unlike the IGTA eJournal | Summer 2020 | 14