Water-Dragon sword, like all other Shingu, was created four hundred years before the start of the series by the emperor of that time in an attempt to create weapons that could surpass the Teigu.
It was kept hidden in the Empire's secret storage until It was given to Najasho by Gozuki. Its status is currently unknown after Najasho fell into a ravine.
The Gravekeepes have applied the same transformation abilities that they use onto the water-dragon sword.
Its special ability allows the user to become extremely powerful for three minutes, but at a cost; the user becomes extremely fatigued after that time limit is expired.
When the Shingu activates its ability,the users hair grows much longer and their eyes become slited,akin to that of a dragon's.
The weapon's may have been created using the magical secret methods of the exiled tribe of settlers who possessed the ability to transform themselves into animals,the tribe's descendants eventually become the Gravekeepers.
↑ 1.01.1Akame ga Kill! Zeromanga; Chapter 3, page 11
↑ 2.02.12.2Akame ga Kill! Zeromanga; Chapter 3, page 27