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High street bank launches country’s first €1bn affordable housing bond
NatWest Group has become the first UK bank to launch a bond which will specifically raise funds for affordable housing.
Proceeds from €1bn bond will be shared among a selected pool of not-for-profit housing associations, which own around 150,000 homes combined.
NatWest did not provide details of which housing associations were involved but said that the transaction achieved a spread of euro mid-swaps + 90 basis points. NatWest’s bond was also four times oversubsribed.
Dominic Brindley, head of public sector and structured asset finance at NatWest, told Inside Housing: "Clearly the level of demand and the ability to tighten the pricing to where it was very well received."
The bond is aligned with the International Capital Market Association (ICMA) ‘social’ label which says that proceeds must fund “new and existing projects with a positive social outcome”.
Social housing bond aggregator MORhomes has previously issued bonds using this label and more recently upgraded to a ‘sustainable’ framework.
The bank said the bond reflects its commitment to the affordable housing sector and comes after NatWest pledged to provide the sector with £3bn by 2022, helping to build 20,000 extra affordable homes.
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Alison Rose, chief executive of NatWest, said: “The launch of our inaugural affordable housing social bond reinforces our pledge to provide £3bn of funding to the affordable housing sector by the end of 2022.
“The proceeds from this bond will help fund the provision of affordable housing in the UK, resulting in positive social impacts and helping to reduce inequalities in communities across the country, a number of which have been severely impacted as a result of the pandemic.”
NatWest said the issuance includes the allocation of proceeds to both new and existing lending, with full allocations expected over the next 12 months.
The bank will then issue an impact assessment report at least annually thereafter, in line with ICMA standards.
It represents the group’s third issuance from its green, social or sustainability bonds framework, having previously launched a social bond for small businesses in areas of high unemployment and a green bond for 13 renewable energy projects across the UK.
Ms Rose said the multiple issuances “helps to underline out commitment to the green and social sectors”.
NatWest is also one of the early adopters of the Sustainability Reporting Standard for Social Housing, aimed at unifying environmental, social and governance (ESG) reporting within the UK social housing sector.
Stuart Heslop, head of UK housing at NatWest, said: “I think as we start this year, our works in progress are even stronger than they were last year. I would envisage 2021 being as strong, if not stronger, than last year.”
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