BayernLB as BayernLabo’s mandated lead arranger
Munich – BayernLabo has just placed its second social bond on the capital market – and with great success at that. The issue, which was capped at EUR 500 million, has garnered a Aaa rating from Moody’s. BayernLabo plans to use the proceeds to fund a series of loans it is issuing under its affordable-housing construction programme designed to help low-income households.
The successful transaction was handled by a syndication comprising BayernLB, Crédit Agricole CIB, DZ BANK, Erste Group and Helaba. The 15-year social bond has a 0.25% coupon. That it was oversubscribed by an exceedingly wide margin speaks to the stark interest among institutional investors. The demand came mostly from insurance companies and pension funds, central bank / public institution investors and asset managers. While German-speaking investors made up a large portion of the purchasers, there was also a keen interest shown, notably, by investors in Scandinavia, Asia and the Benelux countries. Very encouraging was also the large share of sustainability-conscious ESG investors, who accounted for over half of the order book.
“We are delighted and proud that, after debuting BayernLB’s green issue and our DKB subsidiary’s green bond, we were now able to start off the new year by putting our Group-wide expertise in sustainable finance to use yet again, through BayernLabo’s second social bond. By issuing this instrument, BayernLabo is again fulfilling its public mandate of making affordable housing possible. In this way, BayernLabo is also helping the Free State of Bavaria to fulfil its own long-term social responsibilities”, says Edgar Zoller, Deputy CEO of BayernLB.
Back in 2017 BayernLabo became the first development bank in Germany to place a social bond on the market, which also turned out to be highly successful. The independent sustainability rating agency ISS ESG (formally known as oekom research) conferred the “Prime” status on BayernLabo as well as a C+ rating, propelling the bank to the ranks of the top ten leading institutions in the sector.
“When BayernLabo issued Germany’s first social bond in 2017, it did so in a fledgling market. Many investors at the time were interested, sure enough. But most of them were only concerned about green investment strategies. It’s great to see how investors today now put social on a par with green. Both are extremely important for any sustainable strategy”, says Florian Ruhland, who heads BayernLabo’s Strategic Tasks Department.
BayernLabo is the municipal and development bank of the Free State of Bavaria and a member of the BayernLB Group. The institution acts traditionally as a body implementing government housing policy for state-subsidised housing in Bavaria. Since 2006 BayernLabo has also been aiding the Bavarian authorities through its low-interest loans and special subsidy programmes.