CREDEM Issues €500M Social Senior Bond

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by KnowESG
KnowESG_CREDEM Issues €500M Social Senior Bond
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Credem's latest financial endeavour, the €500 million Social Senior Preferred bond, has seen remarkable success, drawing nearly €1 billion in investor interest—nearly twice its initial offering size.

This oversubscription demonstrates the strong demand for this financial instrument. The bond has a non-call period of 5.5 years and a total maturity of 6.5 years, offering an attractive final yield of 4.914%.

Through this Social Bond, Credem Group reaffirms its commitment to a strategy that harmonises sustainability with growth, aligning with the broader goal of supporting the nation's development.

Simultaneously with the bond issuance, Credem has announced a capped tender offer for its €500 million Senior Non-Preferred bond due in October 2025. This strategic move underscores Credem's proactive approach to managing its financial portfolio.

This Senior Preferred (SP) bond has been specifically designed to bolster social sustainability initiatives, accentuating Credem Group's dedication to ESG (Environmental, Social, and Governance) projects.

Notably, all bonds issued by Credem in 2023 have adhered to ESG principles, accumulating a substantial total of approximately €2 billion in green and social transactions. This bond offering is conducted under the EMTN Programme, approved in March 2023.

The response from the market was robust, with orders approaching €1 billion, nearly double the bond's actual size. This strong investor interest allowed for a 25 basis point reduction in the initial spread guidance, starting at IPT of MS+185 bps and closing at MS+160 bps. The bond carries an annual coupon rate of 4.875%.

This bond has been launched in alignment with Credem's Green, Social & Sustainability Bonds Framework, which was updated in May 2023. The proceeds from this offering will be directed towards supporting social initiatives, including the financing and/or refinancing of loans to small and medium-sized enterprises operating in economically disadvantaged regions, bolstering female entrepreneurship, and enhancing healthcare-related activities.

The Social bond is anticipated to receive a Baa3 rating from Moody's and a BBB rating from Fitch, boasting a maturity of 6.5 years with a callable feature after 5.5 years, optimising regulatory efficiency.

Credem's bond placement was orchestrated with the support of a syndicate of banks, including BNP Paribas as the EMTN Programme Arranger, BofA Securities, Crédit Agricole CIB as the ESG Structuring Advisor, Deutsche Bank, and Santander.

Investor distribution revealed that 46% of the bond found its way to institutional and professional investors within Italy, while the remaining 54% was allocated to foreign investors, notably from the UK & Ireland (19%), France (17%), and DACH countries (15%).

The note garnered strong interest from diverse investor types, with fund managers accounting for 59%, banks and private banks for 32%, and pensions & insurance funds for 8% of the subscriptions.

ESG investors, who focus on environmental, social, and governance considerations, constituted a significant portion of the final book, underscoring the bond's appeal to socially responsible investment strategies.

In tandem with this bond issuance, Credem has initiated a partial buy-back offer, capped at €200 million, for its Senior Non-Preferred bond issued in 2019 (ISIN XS2068978050). This move exemplifies the robust liquidity position of the Group, further enhancing its financial standing.

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Source: Credem Banc


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