Kensington Mortgages’ latest securitisation, sized at £472 million, is the first labelled Social Bond from a specialist lender.
It aligns with the ICMA Social Bond Principles of 2020 and contributes towards meeting the United Nations Sustainable Development Goals. The Social Bond has been formally accredited and recognised by ISS ESG, a leading provider of corporate governance and responsible investment solutions.
Under Kensington’s Social Bond Framework, the Issuer (Gemgarto SPV) will finance the purchase of such a pool of loans through a term non-recourse securitisation of the underlying loan portfolio, involving the issuance of securitised Social Bonds to investors. The senior bonds have been priced at +59bps over SONIA.
The deal has garnered a total of 28 unique investors across the four tranches, including bank treasuries attracted by the STS paper and investors that now include ESG factors as part of their investment’s decision.
The deal was oversubscribed across all tranches and the all-in pricing achieved is the tightest by a Kensington securitisation since 2008, with a total cost of 66bps.
The Social Bond follows the 2020 launch of Kensington’s first range of environmentally friendly mortgage products, the eKo Cashback Mortgage – which was the first environmental-friendly mortgage product from a specialist lender in the UK.
Alex Maddox, capital markets & digital director, Kensington Mortgages said: “We’ve started the new year in a very strong position. With the successful pricing of our first securitisation of 2021, it marks Kensington as the first specialist lender to issue Social Bonds in the UK RMBS markets.
“Our aim is always to help underserved borrowers. We look beneath the surface and consider complex and multiple income sources and lend to those who do not pass the automated credit process that most high street banks rely on and otherwise struggle to own a home.
“We are continuing to integrate ESG initiatives into our business. Last August, we publicly released our ESG targets for the current financial year for the first time – again making us the first specialist lender in the UK to publish such an initiative. These will be reviewed on an annual basis so that we can publicly report on the progress we are making in each area – and our targets will help ensure that we are creating a positive impact in both the workplace and wider world.
“We also provided EPC data for the properties in the GMG 2021-1 transaction which is the first time that this has been provided by a UK specialist lender.”