Social Bonds

DKB sold a four times subscribed €500m five year “blue” social Pfandbrief focused on water and waste water services on Wednesday, with the Eurosystem and SRI investors among those helping the German issuer achieve an “outstanding” deal, according to its head of funding and IR.

Landesbank Baden-Württemberg inaugurated a social bond framework on 19 September, bringing its total sustainable bond issuance including green bonds to €3.7bn with a €500m senior non-preferred trade. The debut is the first social bond to be assessed against new ISS-oekom ESG KPIs for their contribution to related SDGs.

Asset growth, EU sustainable finance initiatives and pricing benefits could all help green bond supply rise to meet the growing demands of investors, according to speakers at an LBBW conference on 1 March, where a broadening of issuance, particularly into social bonds, was called for.

Caffil sold the first French covered bond in either green or social format on Tuesday, a EUR1bn eight year healthcare deal that drew over EUR2.6bn of orders and marginally outperformed the most recent comparable supply, according to a lead, while Moody’s said the ESG move is credit positive.

Caffil is roadshowing a social bond that is set to be the first social or green covered bond from France, with the proceeds refinancing loans to public hospitals, and the group plans to follow up the debut with green covered bonds later this year and potentially social issuance from parent SFIL.

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).