The standalone balance sheet of CFF with no possible recourse by the parent company in the case of liquidation or bankruptcy of the parent ensures investor protection and the sole mission of the société de credit foncier is to acquire eligible assets as permitted by the law and to issue obligations foncières that benefit from a legal privilege for the sole benefit of bondholders.

Since its creation in 1999, CFF has benefited from the best AAA/Aaa/AAA ratings conferred by the three leading rating agencies. Furthermore, CFF has selected a structured rating methodology which requires a suitable policy of overcollateralisation and the application of strict management rules to supplement the applicable regulatory framework.

This structured rating approach is based on the principle of conferring a rating based on an analysis of resistance to stress scenarios with regard to credit risk, interest rate risk, liquidity risk and exchange rate risk. These stresses help to determine the amount of unsecured debts required to obtain the triple-A rating.

This top rating is independent of the parent company rating (complete delinkage).

As a result, CFF has made additional commitments to offer more security to holders of obligations foncières and to ensure that its ratings remain stable.

The assets of CFF originate from three main sources. Their eligibility for purchase is defined by the 1999 law:

•  Eligible loans purchased from Crédit Foncier de France or from Caisses d'Epargne on an ongoing basis: loans to local authorities or public sector entities and mortgage loans to individuals; and
•  Other eligible assets purchased or originated on the market: those obtained from public and local sector entities, securities issued by the regional public sector and local authorities, and replacement securities. Replacement securities ensure the maintenance of one year's worth of liquidity needs on the balance sheet at all times.

Assets benefiting from a public guarantee represent the largest portion of CFF's assets at present, (59%) and remain the largest area of growth.

Funding strategy
As of December 31 2007, and since its creation in July 1999, the outstanding amount  in obligations foncières of CFF stands at over €79 billion.

The funding strategy is based on three main pillars:

•  EUR and USD benchmarks that benefit from market-making commitments signed by over 25 major banks. Taps of those benchmarks to provide necessary liquidity to the secondary market
•  Benchmarks in other currencies, including AUD, CHF, JPY and GBP
•  Private placements

CFF's funding volume in 2007 was €23.5 billion. The issuer will raise in the region of €15-20 billion in 2008.

AUD activity
CFF first entered the Kangaroo bond market in February 2005. The issuer now has A$1.2 billion outstanding, in three maturities, in this market.