The GBP 1.1billon transaction is the first deal of its kind to reference a portfolio of exclusively UK Environmental, Social and Governance (ESG) assets. It has enabled NatWest Bank to recycle capital and increase its lending to the renewable and sustainable energy sector, helping spur the UK’s move to low-carbon infrastructure.

A&O advised NatWest Bank’s Project Finance and Portfolio Risk Mitigation team and NatWest Markets’ Financing and Risk Solutions team in structuring and documenting the deal, as well as offering legal support to NatWest Markets in its distribution.

The reference portfolio includes loans relating to onshore and offshore wind, solar, smart meters, energy-from-waste and biomass power. The loans have been verified as green by Sustainalytics, a leading independent ESG, ratings and analytics firm and in alignment with industry standards, including the Loan Market Association’s Green Loan Principles. A market source has estimated that the portfolio’s annual electricity generation can power the equivalent of 4.6 million households, with the CO2e avoided equivalent to taking 2.3 million cars off the road.

Parya Badie, Partner, commented: “This transaction opens up the possibility of further capital relief transactions in relation to ESG portfolios, both in the UK and beyond. It also underlines the potency of synthetic securitisation as a tool for banks to manage capital in relation to non-traditional portfolios, and as a means for investors to pursue opportunities in new and innovative areas.“