BNG Bank lists new social housing bond on Luxembourg Stock Exchange
On 13 July 2016, the Luxembourg Stock Exchange (LuxSE) listed and admitted to trading on its “Bourse de Luxembourg” market, a social (or “sustainable”) bond issued by BNG Bank.
The Dutch bank issued an 8-year €1 billion social bond (ISIN XS1445725218) that will be used to finance social housing projects in the Netherlands.
A social bond is a bond whose proceeds are used to fund projects addressing or mitigating specific social issues or seeking to achieve positive social outcomes, especially, but not exclusively, for target populations. Like green bonds, social bonds are benefiting from a newly established taxonomy and disclosure best practice such as those released by the ICMA’s Green Bond Principles in June this year.
BNG Bank is the first issuer to issue a social bond specifically intended to fund the Dutch social housing sector. In 2014 and 2015, the bank issued two bonds to fund the most sustainable municipalities in the Netherlands.
The Dutch bank worked together with Telos, a research institute specialising in sustainable development operations, to develop a social bond framework as part of the bank’s investment in “best-in-class” sustainable municipalities in 2015.
BNG Bank's social housing bond has an annual coupon of 0.05% and the re-offer price is 99.992%. The actual yield based on this is 0.051%. Lead managers are Credit Agricole, Morgan Stanley and Rabobank.
Comments on the issue
Julie Becker, member of the Executive Committee and Head of International Primary Markets (IPM) at the Luxembourg Stock Exchange, said: “BNG Bank’s listing is confirmation of the growing trend towards sustainable investment that we have been witnessing in recent years. We see the development of market standards relating to eligibility and transparency is a crucial step towards the opening up of a sustainable bond market and we are commited to offer issuers any guidance necessary to successfully step into the market.”
Olivier Labe, a member of BNG Bank’s Executive Board, said: “Sustainability is a crucial element in our strategy. With this social bond BNG Bank intends to increase its customers' awareness about sustainability. In addition, the bank is responding to the ever-increasing need among international capital providers for sustainable investments that also have a social impact. With this transaction, the bank broadens its investor base and, as a consequence, further improves the bank's access to international capital markets. This supports the bank's policy to be able at all times to provide affordable financing to the Dutch public sector and it broadens the tools available for housing associations to effectively pursue and monitor their sustainability policy.”