london stock exchange welcomes rbs celebrating its inaugural social bond issuance
The Chief Financial Officer of the Royal Bank of Scotland this morning opened the market at the London Stock Exchange to mark the issuance of the bank’s inaugural social bond. The bond was issued on Friday 8 November and is the first exclusively Social Bond issued under ICMA’s Social Bond Principles in the UK by any financial institution.
RBS Chief Financial Officer, Katie Murray, commented:
“It is a great privilege to be able to open London Stock Exchange and mark the issuance of our inaugural social bond. We saw strong demand in the market, as institutional investors increasingly target socially useful lending and seek opportunities to track and measure the impact of their investments.
“This was an important milestone for the bank and is the first issuance under our new framework. It paves the way for future issuances in support of our green, social and sustainability ambitions as we build a purpose-led bank that champions the communities we serve and help them to thrive.
CEO of London Stock Exchange plc, Nikhil Rathi, commented:
“We are delighted to welcome RBS’s first social bond to London Stock Exchange’s Sustainable Bond Market and congratulate them on their successful issuance, the proceeds of which will help support SMEs operating in some of the most disadvantaged areas of the UK. London Stock Exchange is a leading centre for green, social and sustainable finance and we are seeing growing demand from investors as they look to incorporate sustainability and ESG considerations into their portfolios.”
Taking data from the Office for National Statistics, the bond is linked to the bank’s ~£2.5bn of existing lending to small and medium-sized enterprises operating in the areas of the UK with the highest levels of unemployment and lowest job creation.
Using a standardised methodology, the bank will provide an impact report to investors at least annually, which will measure the jobs created and retained as a result of the lending. This report will also be published on rbs.com.
It is the first issuance under RBS’s new Framework, which provides a basis for the future issuance of Green, Social or Sustainability Bonds.
The bond raised €750m (~£650m), with a 6NC5 maturity structure, in Senior Unsecured format and the spread was set at MS+100, giving rise to a coupon of 0.75%. Peak demand for the issuance amounted to~€2bn. It will have a rating of Baa2/BBB/A by Moody’s, S&P and Fitch, respectively.
The banks placing the issuance were ABN AMRO, Credit Agricole CIB, ING, NatWest Markets and Nomura. The bond was listed on the London Stock Exchange’s Sustainable Bond Market – one of only a handful of social bonds to be listed in this section to date.
Loans originated within 36 months are eligible for inclusion in a Social Bond portfolio. Each impact report will look back over the proceeding period based on the average composition of our eligible portfolio.