What are the exposures to France by sector ?

Following the European elections and the announcement of the dissolution of France’s National Assembly by President Emmanuel Macron, High-Beta credits and financials have struggled, with some French names (real estate investment companies, cyclicals and utilities in particular) significantly underperforming. Financial credits are the most sensitive to changes in the OAT-Bund spread; Six of our covered REIT companies are exposed only to France, and three others are more than 90% exposed to France based on asset value . Icade is the most at risk of underperforming, while Carmila and Covivio Hotels offer good entry points on the credit market. Utilities are also highly sensitive to the political risk in France given that i / French issuers account for 24% of the iBoxx utilities index, ii/ EDF, RTE, Terga and Engie to a lesser extent generate a large part of their Ebitda in France, iii/ those players are sensitive to regulatory (gas tariffs) and policy risks (nuclear, renewables). In the Transportation and Mobility segment, Renault, Air France and ADP have significant exposure to France, while automotive parts manufacturers Valeo , Forvia , OpMobility and Michelin have exposures of less than 10% at revenue level. The recent underperformance of Valeo and Forvia represent a buying opportunity if there is no relative majority in the elections and an enlarged or even technocratic government is formed; French High Yield issuers are relatively more exposed to France than their Investment Grade peers. Kiloutou and Loxam to a lesser extent, as well as Fnac / Darty , would in our view be most sensitive to any adverse change in the French political risk; Sanofi generates just 5.5% of its revenue in France. Despite the political stakes involved in reshoring production in the pharmaceutical industry to France, the impact on the group is likely to remain limited.