Berlin Hyp became the first European bank to have issued in green, social and sustainability-linked formats with the launch of a €750m 10 year mortgage Pfandbrief on Tuesday supporting affordable housing, and the bank plans to be a similarly familiar face in the social market as it is in green bonds.
Deutsche Kreditbank (DKB) on Thursday issued the first benchmark social mortgage Pfandbrief, a €500m 10 year that attracted €2.36bn of orders and which tackles the politically sensitive topic of housing in its hometown of Berlin.
NN Investment Partners’ green bond offering has this year been boosted by an increase in sovereign activity, while social developments may have opened a gap in the market, according to Douglas Farquhar, client portfolio manager for green bonds, NN IP, even if its reservations about sustainability-linked bonds (SLBs) persist.
Moody’s has raised its full-year forecast for sustainable bond issuance on the back of record volumes globally in the first half of the year, and now expects 2021 supply of labelled use-of-proceeds bonds and sustainability-linked bonds to approach $1tn.
Hypo Tirol launched the first Austrian euro benchmark covered bond in social format last week, a €500m 10 year deal that the bank’s head of treasury deemed its “best ever”, as it achieved its biggest book and tightest spread while supporting affordable housing in the region. Green bonds are next on its agenda.
Caffil is posting levels for social bonds in private placement format, in what is understood to be a first for a covered bond issuer, with its funding team citing investor interest in such product, which it hopes will add “dynamism” to its MTN issuance at the long end of the curve.
In response to the pandemic, Council of Europe Development Bank (CEB) has doubled its Social Inclusion Bond outstandings and added the health segment to its framework, while fast-tracking Covid-19-related support. Arturo Seco Presencio, deputy CFO, head of funding, treasury and ALM, CEB, discussed its rapid reaction and social bond trends with Sustainabonds’ Neil Day.
Strong demand for a Covid-19-focused social bond from Crédit Mutuel Arkéa on Thursday allowed the French issuer to price its biggest senior non-preferred (SNP) transaction, a €750m nine year non-call eight deal whose proceeds are earmarked for supporting healthcare and SME development.
Caffil took advantage of an existing social bond framework to be the first-mover in Covid-19-related covered bonds on Tuesday, tapping into improving conditions to raise €1bn for lending to public hospitals ahead of an anticipated broader rise in French public spending and SFIL group funding.
Investors have rallied to a wave of social-style bond issuance from supranationals aligned with the issuers’ role in the fight against the impact of the Covid-19 pandemic, providing at the same time a tonic for ailing fixed income markets. Neil Day explores the trend and the potential for such bonds.