Inquired: BHH Social Pfandbrief

After Berlin Hyp has already been a regular player in the green bond market for years, social bonds have quickly developed into another reliable ESG funding instrument for us since our debut last year. This is why we have been able to structure four of the five benchmark Pfandbriefe issued so far in 2023 as ESG bonds: Two Green and two Social Pfandbriefe. With the steady issuance of both formats, we can show that environmental friendliness and social aspects do not have to be at odds with each other, even in the building sector. Quite the contrary!

ESG products have become firmly established on the capital market. A growing number of investors prefer green and social bonds to conventional bonds. Since our latest Pfandbrief was the first covered bond on the market after the summer break, we wanted to create additional execution safety with the social label. I think we succeeded well in doing so. The entire Berlin Hyp is very satisfied with the result.

Green bonds have been benefiting from greater investor demand than conventional bonds for many years, and this is increasingly true for social bonds as well. During the marketing phase, quite a number of investors indicated that they were particularly interested in our Pfandbrief because of the social label. As a result, the issue was more than three times oversubscribed, which enabled a tightening of 4 bp in the bookbuilding. So there is indeed a price advantage, albeit a small one.

Financing affordable housing is very important to Berlin Hyp. So important, in fact, that this year we also launched a specially labelled loan product on the market in the form of our Social Loan, which is incentivised in terms of price – analogous to our Green Loans.

The lack of affordable housing is one of the pressing problems of our time. The current environment with rising interest rates and still high inflation does not make the situation any easier. This makes it all the more important to provide funding through social credit and capital market products. Since issuing our first Social Pfandbrief, we have already been able to expand our social finance portfolio by about one third.