Nederlandse WaterschapsBank (NWB) issued the largest ever social bond, with a €2 billion ($2.3 billion) 'affordable housing' issue.

It was the Dutch public sector lender's debut in the social bond market.

NWB's social bond has two tranches, one raising €1.5 billion with a seven-year tenor and a €500 million tranche with a 15-year tenor.

The seven-year tranche priced 13 basis points below mid-swaps, with a coupon of 0.25%, while the €500 million, 15-year tranche's coupon was 1.125%. It priced 9 basis points above mid-swaps.

Proceeds of the bond will be used to address "a very relevant problem in the Netherlands", which investors are happy to help solve it, NWB said.

Eligible projects consist of a selected pool of loans funded by NWB to invest in social housing activities by Cooperating Aid Agencies in the Netherlands, as determined by the Social House-building Guarantee Fund (WSW). The proceeds will exclusively fund NWB lending to these agencies, only if such a loan has been approved and guaranteed by WSW.

In addition, 80% of a lendee Housing Association's social housing lettings must be given to households with a maximum income of €35,739 per year.

Investors in the bond included ACTIAM, Achmea Investment Management, APG Asset Management, Crédit Agricole, Bankhaus Lampe, Werner Huber, Robeco Investment Management, Municipality Finance and OP Corporate Bank.

Crédit Agricole CIB, HSBC, Rabobank and SEB were joint lead managers on the bond, which is listed on the Luxembourg Stock Exchange and received a AAA rating from Moody's and S&P.

NWB plans to "extensively report" on the social advantages of its maiden social bond issue.

A judge for Environmental Finance's green bond awards highlighted the social bond's "good liquidity".