Case study

Unédic achieves its second largest ever orderbook for €1 billion Social Bond

28 Apr 2023 . 3 min read

Image © Unédic

Protect and support sustainable employment

Founded in 1958, Unédic is a non-profit organisation which manages the unemployment insurance in France. Unédic’s mission is essential to the French social system: the agency manages the benefit payments on a national level, monitors trends in the labour market, and finances public employment policies.

The organisation and the mission of the unemployment insurance system – which is enshrined in law – are inextricably linked to the fight against poverty and exclusion, and therefore contribute to the UN Sustainable Development Goals (SDGs) #1 “No Poverty”, #4 “Quality Education”, #8 “Decent Work and Economic Growth”, and #10 “Reduced Inequalities”.

In 2020, Unédic published its Social Bond Framework, which states that the proceeds raised by social bond issuances will be used towards the scheme’s mission of compensating, protecting and supporting workers, helping companies to preserve jobs in cases of economic or health crisis, and neutralising periods of job loss through the contribution to supplemental retirement regimes. Eligible social expenditure under the framework – for which ISS ESG provided a Second Party Opinion (SPO), confirming that it aligns with the International Capital Market Association’s Social Bond Principles – fall into two categories: 1. Socio-economically protect against the vagaries of the job market by ensuring economic and financial security; and 2) Assisting individuals with their professional (re)integration, notably by developing their skills and qualifications, or supporting their entrepreneurial projects or career changes.

Orders reach over €13 million for Unédic’s sole transaction in 2023

After the Covid-19 crisis in 2020 and 2021, Unédic returned to surplus in 2022 due to the strong rebound in employment in France and the end of Covid-19 related measures. This recovery has enabled the scheme to start deleveraging, and therefore Unédic’s funding plan for 2023 is limited to €1 billion, which they now sought to raise in one transaction, a 10-year €1 billion (Will Not Grow) Social Bond.

Announcing the new social benchmark, which NatWest supported in the role of Joint Bookrunner, investor demand developed swiftly when orderbooks formally opened. When orders reached a first peak at €9 billion after just an hour, Unédic opted to tighten the price, which didn’t deter investors: orders continued to come in, leading the agency to adjust the spread again, marking a 4 basis points tightening overall from initial guidance.

The issuance, which will pay an annual coupon of 3.125%, reached final demand of over €13 billion, representing the second largest ever orderbook for Unédic (after they reached €15 billion in March 2021 for their €3 billion 10-year bond).

With interest from nearly 200 accounts, French investors took 31% of the allocation, followed by German investors taking 26%, investors from the remaining EMEA countries receiving 33%, and investors from Asia taking 10%. Looking at investor type, bank demand was strong at 41%, while Central Banks/Official Institutions received 30%, Asset Managers 17%, and Pension/Insurance 11%.

NatWest committed to actively contribute to social, economic and environmental progress

Damien Carde at NatWest, commented: “We congratulate Unédic on this very successful issuance, and we’re proud to have had the opportunity to support them on this social benchmark. This transaction also demonstrates our commitment to actively contribute to social, economic and environmental progress in Europe by supporting organisations such as Unédic.”

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