NRW.BANK is the promotional bank of the German state North Rhine-Westphalia (NRW). Its mission is to support its owner – the state of North Rhine-Westphalia – in the completion of its structural and economic policy tasks. For its three development areas “Economy”, “Housing” and “Infrastructure/Municipalities”, NRW.BANK uses a wide range of promotion tools – from low-interest promotion loans to equity financing, and promotional advisory services. It cooperates with all banks and savings banks based in NRW on a competition-neutral basis.
The agency issues approximately €11-12 billion via the capital markets on an annual basis in several currencies and maturities. Since 2013, NRW.Bank has also issued Green Bonds to refinance environmental-friendly loans, with annual issuance volumes totalling between €500 million to €1.5 billion. From 2020 onwards, the institution added Social Bonds to its funding strategy and has since issued Social Bonds on a regular basis in several formats.
In January this year, NRW.Bank published its updated Social Bond Framework (PDF), which 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”.
Having already tapped into the EUR primary market four times this year, NRW.Bank was looking to issue its first Social Bond for 2022 under its updated Social Bond Framework. So, Germany’s second-largest development institution approached NatWest to support the transaction in the role of Joint Bookrunner.
Capturing a supportive market window, NRW.Bank announced its new €1 billion (no grow) Social Bond to the market, with order books growing swiftly and reaching over €2.4 billion within just over an hour. This allowed the issuer to tighten the spread. After the guidance, orders peaked at over €3.7 billion, seeing the 15-year Social Bond priced at a final spread of Mid Swaps + 6bps.
Domestic accounts led the demand: German investors took 47% of the allocation, followed by by BeNeLux accounts taking 15%. Looking at investor types, banks and treasuries represented 42%, followed by fund managers with 34%.
Damien Carde, Head of FBG DCM, NatWest, commented: “We’re delighted to have been able to support our customer, NRW.Bank, with this very successful Social Bond, and we’re excited that we can actively contribute to social, economic and environmental progress in Europe and in the UK by supporting customers such as NRW.Bank with their sustainable debt issuances.”
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