DKB plans ‘blue’ social bond for water supply, sewerage
Deutsche Kreditbank (DKB) is planning to launch a €500m water-themed public sector Pfandbrief under its social bond framework after investor meetings and calls beginning tomorrow (Tuesday), with the use of proceeds of the “blue” issue being water supply and sewerage.
ABN Amro, BayernLB, DZ, Natixis and UniCredit have been mandated to arrange the premarketing from tomorrow to Friday, with the launch of an intermediate to long-dated euro benchmark expected to follow.
The BayernLB subsidiary inaugurated its social bond programme with a €500m five year public sector covered bond in September 2018, making it the first German bank to have issued in green and social format, with DKB having issued green bonds since June 2016. It also sold a €7m retail social bond earlier this year.
Since the issuance of its debut social bond – the first social covered bond from Germany backed by public sector assets – DKB’s social asset pool has grown from around €1.5bn to €2.8bn, according to an investor presentation, thanks to an increase in the “public supply” category, which grew from €424m to €1.724bn.
This public supply category includes water supply and waste water (sewerage), with DKB’s clients including municipal water companies. Some €1.041bn of this lending is cover pool-eligible, comprising 569 loans in Germany.
In its investor presentation, DKB notes that blue is the colour of DKB’s brand, water, and “our planet”. However, it notes that as well as its social aspect, the issues its bond is addressing has green aspects, highlighting how as well as SDG 6 – clean water and sanitation, the blue bond will affect other, environment-related SDGs.
The issuance is aligned with the Social Bond Principles and has a second party opinion from ISS oekom.