The development of the Social Bond Principles and a focus on the Sustainable Development Goals are among catalysts helping the social bond market grow in the slipstream of green bonds. Pioneering and future issuers and others shared their experiences and expectations with Sustainabonds for this timely roundtable.
Deutsche Kreditbank has become the first German bank to sell both green and social bonds, with a EUR500m debut social public sector covered bond on Tuesday, whose status helped it evade the impact of a cut in ECB QE buying. Mortgage Pfandbriefe could in future be added to its ESG funding suite, according to DKB’s head of treasury.
Korea Housing Finance Corporation (KHFC) will next week begin marketing an inaugural social covered bond – the proceeds of which will be used to support affordable housing – which will be the first sustainable covered bond from Asia. Deutsche Kreditbank is meanwhile set to sell a social debut tomorrow (Tuesday).
Investors active in green bonds stressed the importance of accountability and impact reporting offered by bonds aligned with the Green and Social Bond Principles, but showed flexibility in their investment strategies, in responses to a survey that evinced a mainstreaming of the product.
Those that have broken new ground in sustainable bonds say they have been vindicated by the “unstoppable” movement, while issuance has catalysed internal change as well as attracting new investors. And hopes for the future are high. Tom Revell reports from LBBW’s European Covered Bond Forum in Mainz on 1 March.