Client stories

Motability broadens investor base with social bond issuance

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Helping customers achieve everyday freedom

Founded in 1977, the Motability Scheme – operated by Motability Operations (MO) and overseen by the registered charity, Motability – enables disabled people to become mobile by using their mobility allowance to lease a new car, scooter, powered wheelchair, or wheelchair accessible vehicle.

As the largest fleet operator in the UK, MO today provides affordable, worry-free mobility to around 630,000 people in receipt of higher-rate mobility allowances. The company, which employs over 1,200 people, works with over 30 car manufacturers, offering its customers a choice of more than 1,400 makes and models. The relationship with the manufacturers, and with the 18,000 trained Motability Scheme Specialists at the franchised dealerships, helps deliver a unique service to disabled people.

Investors value MO’s unique proposition

Planning to access the debt capital markets ahead of its £400m 5.375% June 2022 maturity, MO turned to NatWest (in their role as Joint Lead Manager) for support in marketing, structuring and executing a new social bond offering. MO decided on a new 20-year Social bond transaction, tapping into the strong structural bid for duration in Sterling and to take advantage of attractive issuance conditions.

After announcing the transaction, MO engaged with investors in a series of meetings to present its business performance, sustainability strategy and Social Bond Framework in more detail. The transaction attracted a final orderbook of £920m from 57 unique investors. The strong demand enabled MO to print a final transaction size of £500m at a spread of G+90bps, representing a modest c. 5bp new issue concession. The new notes, which pay a coupon of 2.125%, provide material interest savings for MO compared to the Jun-22 maturity, which pays 5.375%, and allows MO to lock-in long-term, cost-effective fixed rate funding to underpin sustainable lease pricing for its customers.

The transaction attracted strong interest from UK Real Money investors (88% of allocations to the UK), with solid participation from continental European accounts (10%). Asset Managers accounted for the majority of the orderbook (80%), followed by Insurers and Pension Funds (12%) and Central Banks and Supranationals (5%).

MO will use the social bond net proceeds for the lease of vehicles, powered wheelchairs or scooters for people with disabilities, as outlined in MO’s Social Bond Framework. DNV GL provided a Second Party Opinion (SPO) on the framework, confirming its alignment with the 2020 ICMA Social Bond Principles and the 2019 Sustainability-Linked Loan Principles.

Supporting sustainable growth

Dominic Hart, Head of Treasury, Motability Operations, said: “We are delighted with the continued support from investors, which will help us to meet the needs of all our customers, today and tomorrow. We are grateful for NatWest’s support, and their insights into the sustainable finance market.”

Caroline Haas, Head of Climate and ESG Capital Markets, NatWest, commented on the transaction: “We’re delighted to be able to support MO’s sustainable growth with this social bond issuance, and we’re thrilled about the very positive investor reception for the transaction. This transaction is another example of NatWest championing the potential of people and families.”

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