The issuer raised €750m with a 0.5% March 2025 bond on Wednesday. Crédit Agricole, Dekabank, DZ Bank and Rabobank set pricing on the deal at 11bp through mid-swaps, tight of guidance of minus 10bp area.
The issue was limited to a potential size of €784m based on NRW’s eligible assets, GlobalCapital understands.
The bond drew around €1.8bn of interest, according to a banker involved in the deal, with plenty of interest from investors that do not typically buy NRW’s bonds.
“Clearly the social responsibility element of the deal has attracted new investors to the NRW name,” said the banker. “NRW is one of the most active and internationally recognised names among the Länder — they enjoy a great international bid, helped by the SRI angle to the deal. The 22.5bp spread over Bunds also helped to attract interest.”
German Länder are not eligible for the European Central Bank’s asset purchasing programme, allowing them to offer a more attractive spread over Bunds than German agencies like KfW or Rentenbank, added the banker.
NRW has an outstanding March 2025 bond which was trading at 11bp through mid-swaps on Wednesday morning, suggesting no new issue premium for the new trade. The deal also priced flat to where NRW would sell a conventional 10 year bond, according to bankers involved in the deal.
Fund managers and banks dominated the allocations, taking 35% and 33% each respectively. Official institutions took 21%, insurance companies 6%, retail investors 3% and pension funds 2%.
Germany based investors bought 32% of the paper, while accounts in Asia took 21%, France 20%, Benelux 15% and 12% going elsewhere.
Land NRW plans to print more in the format, but will not be selling another until at least the end of 2015, according to a source close to the deal.
Other foreign sub-sovereigns like City of Gothenburg, Région Île-de-France and Stockholm County Council have also tapped the market in the past.
The proceeds of Wednesday’s bond will be put towards funding projects and initiatives in the state with environmental or social benefits.
Eligible projects include those related to education and sustainability research, inclusion and social coherence, public transport and local mobility, climate protection and energy transition, protection of natural resources and sustainable urban development.
