Green Bond Review – 1 June: Breaking Records

    Stockholm (NordSIP) – According to Danske Bank, Swedish and international investors, especially pension and insurance companies, are now switching their investments into green and sustainable projects at a faster rate. Danske Bank has been mandated in several of the major issues in recent months, including Vasakronan, Klövern, Kommuninvest, Jernhusen and most recently Landshypotek Bank or even Region Skåne, which issue came out this week.

    Danske Bank advised Landshypotek Bank in the process of developing a green bond framework, which was rated “dark green” in an independent evaluation performed by CICERO. The company plans to use the proceeds of its new covered green bond to finance initiatives that support the contribution of Swedish sustainable forestry to biodiversity and reduce carbon dioxide emissions.

    The interest for the issue was very strong, and the SEK 5.25 billion bond was priced at a so called greenium (a premium to the fair price of an equivalent non-green issue). “By using the Swedish forest in a sustainable way, our forest owners in Sweden make an effort for the climate and the environment every day. We are so pleased with the huge interest in our green issue and we are proud that we and our customers can now contribute to a more sustainable society and a more sustainable financial market,” said Per Lindblad, CEO of Landshypotek Bank.

    Altogether, the year started on a strong green wave. Last year, the market saw almost SEK 40 billion green bonds issued, corresponding to about 6 percent of the entire bond market. This week saw a new issue of SEK 1 billion for Region Skåne in the south of Sweden, which takes the total of SEK-denominated green bonds for 2018 so far to over SEK 40 billion. The first five month of 2018 have therefore seen a larger amount issued than in the whole of 2017.

    Lars Mac Key, expert on green bonds at Danske Bank comments on the trend he sees emanating from investors: “Demand from insurances and pensions for green bonds is huge, almost insatiable. The interest is driven by the strong demand from the companies’ end consumers and constituents to invest in sustainable initiatives and projects. If this trend continues, it is not impossible for us to reach SEK 65 billion in green bonds in 2018, which would require less than doubling the amount already issued this year. This is a positive message for all of us, as an increasing proportion of the investments thus finance sustainable and climate support initiatives,” concludes Lars Mac Key.

    Green bonds are usually issued by companies and organisations working with renewable energy, low-energy buildings and water treatment, but according to Mac Key other industries such as shipping, are now also standing in the starting blocks.

    Picture © NordSIP

    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA is Editor-in-Chief for NordSIP and Managing Director for Big Green Tree Media. She has 18 years of experience in the asset management industry in Stockholm, London and Geneva, including as a long/short equity hedge fund portfolio manager, and buy-side analyst, but also as CFO and COO in several asset management firms. Aline holds an MBA from Harvard Business School and a License in Economic Sciences from the University of Geneva.

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