Yorkshire Water launches sustainability bond

Yorkshire Water has launched its first sustainability bond in a bid to raise £350 million from investors.

The bond will be admitted to the London Stock Exchange’s main market on 18 April and is the first from Yorkshire Water’s recently published sustainability framework, which sets out how the supplier will spend money in ways that have an environmental or social benefit.

In August 2017, Anglian Water launched a £250 million green bond, but Yorkshire Water’s new offering is the first GBP denomination sustainability bond.

Yorkshire Water’s bond will mature in 22 years, in April 2041.

Speaking to Utility Week, BNP Paribas’ head of sustainable capital markets, Agnes Gourc said the bond has been “strongly oversubscribed” and investors have placed more than £1.9 billion of bids.

“It does show there is a strong demand both for Yorkshire Water and for sustainability features in bonds.”

Gourc added that while the sustainability bonds market is relatively small, compared to mainstream investment bonds, it is growing and becoming increasingly popular with investors.

“Utility chief finance officers are more and more aware of investors’ expectations around environmental, social and governance issues,” she said.

“When a sustainability bond issue comes out, it is good for investors because it answers questions around those issues for them. They are not only bought by investors with a pure environmental strategy, but also those with broader strategies around sustainable, responsible investments.”

Yorkshire Water’s director of finance and regulation, Liz Barber added: “Investors have responded very positively to our sustainable finance framework and the success of this issue confirms that we’ve taken the right approach.

“This is the first step in our plans to progressively move our debt portfolio into the framework and shows Yorkshire Water’s commitment to embed sustainability across all our operations.”