Schuldschein market sees trend towards sustain­ability

"We have made sure that the Schuld­schein market remained open for customers with good credit ratings, even during the lockdown in Germany," stressed Hans-Dieter Kemler, a member of Helaba's Board of Managing Directors. As one of the leading SSD banks, Helaba was able to success­fully place a number of German and inter­national transactions during this period. While spreads on the bond market literally shot up, especially at the onset of the crisis, thanks to its lower volatility the Schuld­schein market managed to hold its ground. Although premiums on new issues in both segments have meanwhile come down again, they remain at a slightly higher level than before the out­break of the pandemic. "There is no doubt that some issuers have postponed trans­actions. For the second half of the year, our expectation is that the solid per­formance will be sustained," said Kemler. According to him, this view is also supported by the fact that, towards the end of the second quarter, as many as 11 SSDs had already entered the marketing stage and are set to be valued in the third quarter.

Growing importance of sustain­ability

One trend that has become very clear is the growing importance of sustainability in the Schuld­schein market. In the first half of the year, total issuance of sustainable SSDs amounted to approximately EUR 1.6 billion. Helaba is one of the leading arrangers in this market segment, too, and in the first half of 2020 supported trans­actions by EVN Energie­ver­sorgung Nieder­österreich AG and Schaeffler AG, among others.

The recently issued ESG-linked Schuld­schein of Aurubis AG is further evidence that this trend is continuing un­abated. The Hamburg-based company placed a volume of EUR 400 million with institutional investors and, for the first time, included a sustain­ability component in the financing. In this way, the interest rate of the SSD's coupon is directly linked to the company's sustainability performance, based on the ESG rating provided by the independent and recognised rating agency Ecovadis. In this way, Aurubis has become a trailblazer within the sector and is the first-ever company within the raw materials industry in Germany and Europe to place this kind of ESG-linked SSD - a Schuldschein with a green component.

Helaba supported the transaction, which met with considerable interest despite the turbu­lence on the financial markets due to the coronavirus pandemic. In view of the brisk demand and the fact that the issue was consider­ably oversubscribed, it was possible to achieve an optimum maturity profile. In addition, the price was fixed at the lower end of the marketing range.

Thomas Goerdt, Head of Corporate Treasury at Aurubis AG: "By linking our interest costs to our ESG per­formance, we are sending a clear message to all our stakeholders: that we consider sustainable, responsible action as being consistent with the long-term success of our business. Helaba has been a source of encouragement to us in pursuing this venture and has provided us with wide-ranging support in structuring the sustainability component".

Kemler concludes by adding: "For some time now, we have been observing an increasing shift towards sustainability on the part of our customers. By offering our sustain­ability-focused financial products, we are able to support our customers in embracing this trend and thereby also fulfil our own high standards".

Valued Schuld­schein issues by volume (in EUR millions)
Source: Helaba Research