GlobalCapital Bond Awards 2022: Most Impressive Bank for Corporate Green and ESG-Linked Bonds — NatWest
The UK bank also won Most Impressive FIG House in Sterling in a strong year for its debt capital markets business
As the market for green and ESG-linked debt continues to evolve, no firm is more embedded in this asset class than NatWest.
The bank’s comprehensive expertise in sustainable capital markets ensured a clear win for Most Impressive Investment Bank for Corporate Green and ESG-Linked Bonds – with a second award for its success in the sterling FIG market.
NatWest’s first award recognises its credentials in supporting corporates to navigate sustainable finance, leading to the bank working on an impressive line-up of inaugural deals and innovative frameworks. Several of NatWest’s transactions exemplify the diversification that the sustainable corporate bond market has undergone over the past year.
Dutch state-owned gas Transmission System Operator (TSO), Gasunie, hired NatWest as joint sustainability structuring advisor and bookrunner for its Sustainability-Linked Bond (SLB) Framework and debut SLB. This marked the first European gas TSO to issue such an instrument.
Increasingly companies are looking to develop holistic sustainable treasury practices. They are setting up sustainable finance frameworks because they’d like to be able to apply this type of technology across their product mix
Public sector borrowers, from housing associations through to universities, are also increasingly turning to the ESG capital markets, with NatWest structuring MORhomes’ sustainable bond framework and The London School of Economics’ sustainable finance framework accompanied by an inaugural private placement, among multiple other inaugural transactions in these sectors. But bonds are only one part of the bank’s proficiency across the sustainable treasury space.
“Increasingly companies are looking to develop holistic sustainable treasury practices.
They are setting up sustainable finance frameworks because they’d like to be able to apply this type of technology across their product mix,” said Arthur Krebbers, head of corporate climate and ESG capital markets. “We’ve helped with setting up ESG-aligned commercial paper, private placements, corporate hybrids, loans and also FX, rates and other derivatives structures.”
For instance, last year, NatWest helped the UK retailer Co-op set up an FX forward programme that embeds their emissions target.
Gustavo Brianza, head of debt and ESG advisory, notes that NatWest began integrating ESG into its treasury operations and client offering years ago, in advance of most competitors. “In terms of having an integrated team that embeds ESG technology and know-how across all products, clients and geographies, this was something we did before many other banks,” he said.
This broad expertise is integral to the bank’s success in structuring and leading bond
transactions. “Many issuers won’t contemplate a sustainable bond if they can’t get an aligned derivative solution to manage things like interest rate, inflation or currency exposure,” said Brianza. “Being able to provide each element required by an issuer in a bespoke package can be quite powerful for many customers.”
Similarly, NatWest boasts a deep balance sheet commitment to supporting clients in their sustainability ambitions and investments, including with green loans and sustainability-linked loans, which also supports NatWest’s own journey as a firm.
“Unless you have ESG as a core part of your organisation’s philosophy, I think it’s very difficult to integrate ESG into all the products in the way that we have,” said James Tayler, head of primary capital markets and financial institutions DCM.
NatWest’s ability to ensure optimum integration and collaboration between different parts of its business also factors into the bank’s success in the sterling space. “The firm’s ability to pivot seamlessly between, say, dollar execution to sterling execution in a rapidly changing market is a key differentiator,” said Tayler.
Although the sterling market can offer depth and fantastic funding opportunities for issuers across the spectrum, it is unavoidably a smaller market than euros and dollars. This puts a premium on the ability to know how buyers are reacting minute-by-minute.
“Our primary and secondary teams operate very closely, which enables us to understand how investors are thinking about the market and managing risk in a manner that is time-critical,” said Tayler. “It’s arguably more important in sterling than in any other market, and that speaks to the bespoke execution model NatWest can provide."