Client stories

OneMain issues its inaugural Social High Yield Bond

OneMain Financial (OMFC) is America’s largest personal installment loan company with 2.3 million customers. Its employees help customers meet critical financial needs, including debt consolidation, home and auto repair, medical procedures and other expenses.

Improving the financial well-being of hardworking Americans

OneMain Financial (OMFC) is America’s largest personal installment loan company with 2.3 million customers. Its employees help customers meet critical financial needs, including debt consolidation, home and auto repair, medical procedures and other expenses. Loan specialists work with each customer to develop a monthly budget, empowering individuals to choose a loan that works for their specific situation as well as helps ensure they can repay their loan successfully. OMFC also reports to major credit bureaus, helping customers build their credit as they repay their loans on time.

In addition to personal loans, OMFC offers free financial education opportunities for customers and the wider community in the form of town halls, a library of articles and blogs, and micro-courses on budgeting, savings and credit. Through philanthropic donations and community partnerships, the company has also made investments to support financial literacy, community and economic development, and racial and social justice initiatives – including more than $1million to pandemic relief efforts in 2020.

Social bond proceeds fund loans to credit-insecure and credit-at-risk communities

Following the publication of its Social Bond Framework in June this year, OMFC announced a $500 million 15year social bond in the same month, marking the company’s inaugural ESG1 capital markets issuance. NatWest was selected as one of the joint bookrunners for the transaction.

The proceeds of the social bond will be used to support OMFC’s continued efforts to provide responsible loans to credit-insecure and credit-at-risk communities as defined by the Federal Reserve Bank of New York. At least 75% of the loans funded by the Social Bond will be allocated to women or minority borrowers as outlined in OMFC’s Social Bond Framework, which received a Second Party Opinion (SPO) from S&P Global Ratings. The rating agency confirmed that the projects included in the framework align with the UN Sustainable Development Goals #1 “No Poverty” , #8 “Decent Work and Economic Growth”, and #10 “Reduced Inequalities”.

With order books quickly oversubscribed, OMFC upsized the bond to $750 million, with a 3.5% coupon. Showing that inclusion also extends to its business partners, OMFC leveraged longstanding relationships with diverse broker-dealers to complete this Social Bond transaction, including service-disabled veteran-owned Academy Securities, Inc., women-owned R. Seelaus & Co., LLC, Hispanic-owned Samuel A. Ramirez & Company, Inc., and woman- and minority-owned Siebert Williams Shank & Co., LLC.

OMFC social bond promotes financial inclusion and opens new ESG market segment

Caroline Haas, Head of Sustainable Finance FIs & SSAs, NatWest, commented on the issuance: “OMFC’s social bond is the primary reason that ICMA’s Social Bond Principles were established to mobilise capital to underserved populations and enhance their access to finance for future mobility and opportunities.”

Edward Brown, Head of US Loan & HY Capital Markets, NatWest, commented on the issuance: “We are delighted with the depth of market support OMFC received for their debut social bond, which marked the first US based  high yield social issuance. With this transaction OMFC has opened a new ESG market segment, which we’re confident others will follow, ultimately helping to raise more capital for social causes to create a fairer society – which is at the core of NatWest’s purpose.”

Dr Arthur Krebbers, Head of Sustainable Finance Corporates, NatWest, said: “OMFC’s successful transaction highlights the growing momentum of ESG spreading further within both the US capital markets and the high yield segment, and we congratulate our customer to their very successful ESG debut issuance. This transaction is yet another example of part of a wider trend in US Capital markets to embed social projects in ESG frameworks, which are garnering strong investor support”

Paul Stevelman, Head of US, NatWest Markets: “We are delighted to have been able to support OMFC with their ESG debut transaction, using our global ESG experience to help our US customers. This social bond issuance reflects the essence of NatWest Group’s purpose-led strategy:  to deliver long-term sustainable performance and accelerate social value in areas where we can make a meaningful contribution as a bank.”

Doug Shulman, Chairman and CEO, OneMain, said: “OneMain’s first Social Bond is an important milestone in our mission to improve the financial well-being of hardworking Americans. It is also a testament to our commitment to financial inclusion and reinforces the work we are already doing to provide underrepresented communities with access to safe, affordable credit. We will continue to build our business around serving our customers responsibly, empowering them financially and making a positive social impact on our communities.”

1 - ESG - Environmental, Social & Governance

The information provided in this article has been prepared by National Westminster Bank Plc (NatWest) for information purposes only and is subject to change from time to time. The information and views expressed should not be treated as advice or a recommendation of any kind. NatWest makes no representation, warranty, undertaking or assurance of any kind (express or implied) with respect to the adequacy, accuracy, completeness or reasonableness of the information provided and disclaims all liability for any use you, your affiliates, connected companies, employees, or your advisers make of it. NatWest accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However, this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed. Copyright 2021 © NatWest Bank Plc. All rights reserved.

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