Record Year for Swedish Green Bonds

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    NordSIP (Stockholm) – What a year 2018 has seen a for green bonds in the Swedish Krona market! We caught up with Danske Bank’s Lars Mac Key who updated us with strong figures for the full year.

    The supply of SEK green bonds outperformed last year by 84%, as the total issuance grew from SEK 37.7bn in 2017 to SEK 70bn in 2018. Green bonds also represented a significant share of the total SEK denominated bonds issued in 2018, as they accounted for more than 10%, up from 6% the year before. “Volumes were driven by all issuer types, but the we saw the strongest growth in the Financials and the Supranational/Government Agencies (SSAs) segments,” says Mac Key.

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    The numbers show that Financial issuers tripled their SEK green bond issuance from low levels in 2017. “Landshypotek Bank very much contributed to the increase of Financials green bonds, when they issued the first ever SEK green covered bond in May, which is also the largest SEK green bond ever issued (5.25bn), targeting sustainable forestry,” comments Mac Key.

    Supranational/Government Agencies constituted the largest share of the total issuance (38%) in 2018, an increase of 89% compared to 2017. According to Danske Bank, Kreditanstalt fuer Wiederaufbau (KfW) and Kommuninvest accounted for the largest volume in the segment, each with a total issuance of SEK 6bn this year. “Basis swap movements during the year, first EUR-based and later in the year USD based, resulted in SSAs being more active in the SEK green bond market,” Mac Key explains. SSAs included both repeat issuers such as the Nederlandse Waterschapsbank (NWB) and the World Bank’s financing arms the International Bank for Reconstruction and Development (IBRD) and the International Finance Corporation (IFC), as well as new issuers such as the Asian Development Bank (ADB) and the European Bank for Reconstruction and Development (EBRD).

    Corporates made up for the second largest issuer type, representing 36% of the total 2018 SEK green bond issuance. “Many new issuers came to market during the year, with an interesting first issue from recycling company Stena Metall which opened the door to other companies in the segment. Otherwise, the newcomers were dominated by real estate companies including Kungsleden, Jernhusen, Vacse, Klövern and Willhem.” The dominance of the real estate sector in the green bond Corporates segment is not a surprise. Real estate made up 85% of 2018 corporate SEK green bond issuance and 81% of the accumulated corporate SEK green bond issuance.

    Municipals, including county councils, represents the group of issuers with the smallest growth, with an increased volume of 53%. “Not only repeat issuers such as Malmö, Örebro, Gothenburg and Region Skåne but also new issuers such as Västra Götalandsregionen, Nacka Kommun and the City of Vellinge came to the green bond market,” Mac Keen adds.

    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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