Information on the use of cookies on the vdp website

The Association of German Pfandbrief Banks uses the Matomo software for anonymized web analysis. The data are used to optimize the website. Further information can be found in our data protection declaration.

Issuers

Inquired: Berlin Hyp ESG-dual tranche

Christian Walburg

Christian Walburg

Association of German Pfandbrief Banks

Why did Berlin Hyp start the new year with ESG Pfandbriefe?

Bodo Winkler-Viti

Bodo Winkler-Viti

Berlin Hyp AG

Green Finance has been a very important part of our business for many years and is deeply anchored in the bank’s corporate strategy. The share of green loans in Berlin Hyp’s overall financing business has increased continuously since the issue of our first Green Pfandbrief in 2015 and now accounts for round about 30% of the total loan portfolio. After focusing on the “E” in ESG in our core business for a long time, the “S” has become increasingly important in recent years, enabling us to publish a Social Bond Framework for the first time in 2022 and to issue the first Social Pfandbrief. Refinancing follows the lending business. And so the issuance of ESG Pfandbriefe has become a matter of course for us. This is also necessary to achieve one of the bank’s strategic sustainability goals: the share of ESG funding instruments in the bank’s funding mix shall be 40% by the end of 2025. The choice of a dual tranche of Social and Green Pfandbrief for the first visit to the capital market in 2023 represents the real novelty for us. In our view, it is the logical consequence and expression of the bank’s strategic development.

Bodo Winkler-Viti

Bodo Winkler-Viti

Berlin Hyp AG

Particularly in covered funding, we will have quite a bit to do in the capital market in 2023. Private placements are now also playing a greater role again. The significant rise in interest rates last year led to a noticeable revival of this market segment, so that Berlin Hyp was able to cover around 20% of its Pfandbrief funding requirements via private placements. However, investors who prefer benchmark issues can also look forward to further stints by Berlin Hyp to the primary market in 2023.

Christian Walburg

Christian Walburg

Association of German Pfandbrief Banks

How do investor demand and funding costs differ for ESG Pfandbriefe compared to traditional Pfandbriefe?

Bodo Winkler-Viti

Bodo Winkler-Viti

Berlin Hyp AG

The investor base for Social and especially Green Pfandbriefe is broader than for conventional covered bonds. Thus, the green bond design has also contributed significantly to the success of the 10-year tranche of our ESG Pfandbrief Dual Tranche issue and brought dedicated Green Bond investors into the order book. After no 10-year covereds had been issued for more than three months in an environment of uncertainty regarding further economic development and high interest rate volatility, the green element of the issue reduced execution risk. In addition, large order books based on broad investor participation allow spreads to be tightened more in the bookbuilding process. We currently see the greenium in covered funding at one to two basis points.