The synthetic risk transfer securitisation is the first exclusively UK ESG synthetic securitisation from a UK financial institution and provides credit protection against a reference portfolio of sustainable energy project finance loans. The portfolio includes loans to the sustainable energy sector, including onshore and offshore wind, solar, smart meters, energy from waste, and biomass power.
RBS was the leading lender to the UK renewables sector by number of transactions between 2010 and 2019, according to InfraDeals. The bank has committed to provide £10 billion of funding and financing to the sustainable energy sector by the end of 2020 to accelerate the transition to a low carbon economy.
It also became a Founding Signatory to the UN Environment Programme’s Financial Initiative Principles for Responsible Bank in 2019, which commits the bank further to align its strategy with the Paris Climate Agreement and Sustainable Development Goals.
Sustainalytics, a leading independent ESG, ratings and analytics firm has assessed the projects within the reference portfolio and verified them as green and in alignment with industry standards, including the Loan Market Association’s Green Loan Principles.
The transaction was executed by NatWest’s Project Finance and Portfolio Risk Mitigation teams, and distributed by NatWest Markets.
Bruce Riley, Managing Director Project Finance, NatWest said:
“This transaction enables a significant release of the capital, which we will recycle to increase further our lending to the sustainable energy sector and support the growth in renewable generation that is essential for the UK to meet its targets on reducing carbon emissions and climate change goals.
“A particular focus for 2020 will be a number of large offshore wind generation assets being developed by some of our key customers, but we also see opportunities in onshore projects across wind, hydro and solar, as well as UK waste.”
Tom van Rijsewijk, Managing Director of Macquarie Infrastructure Debt Investment Solutions, said:
"It has been a pleasure to work with NatWest to deliver this innovative alternative capital management solution.
“This transaction offers an attractive opportunity for our underlying investors while also supporting further investments into the decarbonisation of the UK energy market."
Benedetto Fiorillo, Head of Portfolio Risk Mitigation, NatWest added:
“This transaction delivers an innovative long-term capital management solution for a strategic asset class.”