Case study

NRW.BANK’s fifth social bond attracts strong domestic demand

30 Mar 2023 . 2 min read

Promoting ideas

NRW.BANK is the development bank of the North Rhine-Westphalia (NRW) German state. Its mission is to support them to deliver on the three development areas: “Economy”, “Housing” and “Infrastructure/ Municipalities” through schemes offering low-interest loans, equity financing, and promotional advisory services.

NRW.BANK issues approximately €13 billion via the capital markets on an annual basis in several currencies and maturities. Since 2013, the agency has also issued green bonds to refinance environmentally-friendly loans, with annual issuance volumes totalling between €500 million to €1 billion. In 2020, NRW.BANK added social bonds to its funding strategy and has since issued social bonds on a regular basis in several formats.

NRW.Bank’s updated Social Bond Framework, for which ISS ESG provided a second party opinion, includes the following eligible social project categories: “Affordable Home Ownership”, “SME Financing and Employment Generation”, “Access to Essential Services: Health”, “Access to Essential Services: Education”, “Access to Public Goods & Services”, and “Disaster Management”.

Domestic demand underpins investor support for NRW.BANK’s first transaction in 2023

Looking to issue its first benchmark transaction this year and fifth EUR social bond overall, NRW.BANK asked NatWest to support the issuance in the role of Joint Bookrunner – the same role we played for their €1 billion social bond issuance in September last year.

After a period of market volatility, NRW.BANK timed the announcement of their new €1 billion (no grow) social bond to the market well. Anchored by strong domestic demand, order books closed swiftly at €1.25 billion with an annual coupon of 2.875%.

60% of the bond’s allocation went to investors in Germany, while other European investors took 36%; with banks taking 81%, central banks and official institutions 11%, and asset managers taking the remaining 8%.

Helping people, families and businesses to thrive

Damien Carde, Head of FBG DCM, NatWest, commented: “We congratulate our customer, NRW.BANK on the successful issuance of their fifth social bond. At NatWest, we’re proud to support our financial institution customers with innovative social bond transactions that create a more equal society and ensure a just transition – in line with our purpose of helping people, families and businesses to thrive.”

Image: © NRW.BANK

Dislcaimer

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