Green Bond Review, August 24 – All Aboard the SEK Market

    Stockholm (NordSIP) – As we pointed out in last week’s review, the Swedish market is much hotter for green bonds than elsewhere. This week, Lars Mac Key at Danske Bank shared some fresh data and gave us further reasons to be enthusiastic about the green SEK market.

    According to Danske Bank, a total of 54 issuers, both international and domestic, have used the SEK green bond market so far, for a total issuance of SEK 165.6 billion (€15.7 billion) to date. This represents approximately 5% of global green bond issuance, but the proportion changes when considering more recent trends. In the first half of this year, the Swedish Krona was the third most used currency for Green Bonds (after the US dollar and the Euro).

    The avid Nordic investor base for green bonds is a strong argument for issuers when choosing their issuing currency, together with the opportunity to achieve investor diversification. As an example, Mac Key mentions a large supranational issuer, the Asian Development Bank, which issued its first SEK green bond, with a total of SEK 1.5 billion at the end of June. This entity was one of twelve new SEK green bond issuers this year.

    Danske Bank’s records show that more than 200 unique investors, of whom approximately 150 are Nordic, have taken part in the Green Bonds issued in SEK to date. The keen interest for new SEK issues translated into favourable pricing for several of the recent issues, where the premium achieved over the relevant benchmark pricing ranged from 2 to 8 bps.

    Total issuance in SEK
    Source: Danske Bank

    The SEK issuance for the first half of this year already surpasses the entire 2017 SEK issuance, but there are still four busy months ahead before the year ends. Lars Mac Key mentions two issues to watch out for. Real estate financing company Svensk Fastighets Finansiering has mandated Danske Bank as sole lead manager for the refinancing of its upcoming SEK 920m Green Bond due September 7. A short-term green fixed and/or floating rate note in SEK will be offered to institutional investors following a capital markets day on August 24, subject to market conditions. Together with DNB, Danske Bank also set up a green bond framework for the Stockholm-based Social Building Company Samhällsbyggnadsbolaget (SBB) which is therefore likely to become a new green bond issuer.

    Picture from Pixabay

    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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