The market for Dutch green securitisations of residential mortgages and for green covered bonds more than tripled in size in 2023 compared to 2022, DNB figures show, reflecting investor demand for green investments. This makes the Netherlands a major player in the European market: over half of such European green securitisations have been issued by Dutch institutions since 2016.
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Lenders can raise money by selling bonds to investors to (re)finance existing residential mortgage loans and other forms of credit. This takes the form of securitisations (repackaged loans) or covered bonds when mortgages are used as collateral (see box).
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Securitisations involve the bundling of loans, which are then repackaged as bonds through special purpose vehicles. In the Netherlands, these involve predominantly residential mortgage loans. The associated bonds are called ‘Residential Mortgage-Backed Securities’ (RMBS). Repayment of these bonds depends only on the underlying residential mortgage loans.
Covered bonds are debt securities issued by banks; these are backed by residential mortgages in the Netherlands. Holders of covered bonds have a claim on the bank and, in addition, a preferential claim on the residential mortgages (known as dual recourse).
These figures on issuances of green securitisations and covered bonds involve transactions that the issuers themselves have labelled as green under their own guidelines, which are in line with various international standards. There are multiple standards for green bonds and various bodies that certify them, for example the Climate Bond Initiative and the ICMA Green Bonds Principles. However, the question of what green really means when it comes to bonds is still the subject of debate, and no unambiguous international standards exist yet.
Unlike securitisations (where the green mortgages have already been bought from the institution that previously granted them), the bank can use the funds raised through covered bonds for other sustainable purposes in some cases (e.g. for financing other types of energy-efficient real estate, and not just green residential mortgages).
In 2023, €1.4 billion was spent on securitisations of mortgages on energy-efficient homes, almost three times the 2022 amount (€0.5 billion). This is the highest volume since the first green Dutch securitisation transaction in 2016, which was also the first in Europe. A total of €4.5 billion of such green securitisations have since been issued in the Netherlands. This is more than half of the green securitisations of residential mortgages issued in Europe, which amount to €8 billion, according to the Association of Financial Markets in Europe. The 2023 transactions have thus expanded the market for these green securitisations, for which there is strong investor interest. These residential mortgages in the Netherlands have so far come from two institutions.
Issues of green securitisations accounted for almost 40% of total residential mortgage securitisations in 2023 (up from 19% in 2022). A total of €3.5 billion of securitised residential mortgages were placed in the market in 2023, almost a third more than the 2022 total.
Explanatory note: There were no green securitisations in 2020, which may be related to negative market conditions caused by the pandemic and other factors.
The increase in green securitisations in 2023 contrasts with the downward trend in the total of these external securitisations since 2018. This was partly related to banks’ use of other types of funding, which enabled them to raise money more easily and more cheaply in recent years. Examples include the ECB’s additional lending facilities – now being phased out – and the issuance of covered bonds.
Significantly more green covered bonds were also issued in 2023, with €2 billion being issued by two banks, compared with €0.5 billion in 2022. For the first time, this meant more green covered bonds issued than green securitisations. Although green covered bonds have been more popular than securitisations since 2015, they still represent a relatively small proportion (14%) of total covered bonds issued.
Table 9.2 Securitisations of mainly Dutch assets, by issuance and asset type
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