Case study

Supporting NWB Bank with new Water Bond

11 Nov 2022 . 3 min read

The sustainable water bank

Nederlandse Waterschapsbank (NWB Bank) is a bank of, and for, the Dutch public sector. 100% owned by the Dutch state and local authorities, the strategy of the promotional bank consists of three pillars: 1) to be the bank of and for the public water sector, 2) to serve the Dutch public sector as an essential financial service provider, and 3) to be recognised as the go-to financing partner for enhancing sustainability in the Netherlands.

Having placed its inaugural Green Bond in 2014, NWB Bank has become a major issuer of ESG bonds, split into two programmes: Water Bonds and SDG Housing Bonds. The bank updated its Green Bond framework in March 2022 to align with the 2021 International Capital Market Association (ICMA) Green Bond Principles (GBP) and, on a best effort basis, with the EU Taxonomy. The framework, which received a Second Party Opinion from ESG rating agency Cicero, outlines that Green Bond proceeds will be used to finance and refinance eligible loans.

NWB Bank’s eligible loans are loans that are used for carrying out the legal duties and responsibilities of water authorities in the field of: a) mitigation of climate change, being waterway management (“Mitigation Loans”) b) adaptation to climate change, including investments in climate-resilient growth (“Adaptation Loans”) and/or c) protection and/or restoration of biodiversity and ecosystems, being loans that are related to water related biodiversity projects.

NWB Bank opts for €500 million Green Bond size after strong investor demand

Having issued a Social Bond already this year, NWB Bank sought to issue a 5-year Water (Green) Bond, its first for 2022, and turned to NatWest to support the transaction as Joint Bookrunner.

High quality orders started to come in as order books opened, and, after price guidance, totalled over €700 million. NWB Bank opted for a deal size of €500 million and set the final coupon at 2.750%.

The investor allocation evidenced the quality of the orders, with 43% going to central banks and official institutions, followed by fund managers with 40% and banks with 13%. Looking at investors’ origin, investors from the Middle East and Africa and from the BeNeLux countries dominated the books at 28% and 24% respectively, followed by investors in Germany (13%) and Asia (11%). 47% of the book was allocated to medium or dark green shaded investors.

Enhancing sustainability in the Netherlands

Damien Carde, Head of Frequent Borrower Group DCM NatWest, said: “We’re delighted to have been able to support NWB Bank with their first Water Bond for 2022. The positive reception from investors highlights the quality and demand for NWB Bank’s Water Bonds and the support for their Green Framework. This successful transaction also demonstrates NatWest’s commitment to support our customers on their sustainability journey by offering market insights, innovative sustainable finance solutions and access to a broad ESG investor base.”

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