Strong Start for Swedish Green Bond Year

    NordSIP (Stockholm) – On January 23, SBCB, Klövern AB and Vasakronan issued green bonds worth SEK 6 billion, SEK 1 billion, SEK 500 million respectively. This transaction came on the heels of a five-year SEK 2 billion green bond issued by the Nordic Investment Bank the previous day. According to Danske Bank estimates, SEK 19.8 billion worth of green bonds were issued in Sweden during the first month of 2019. This is equivalent to approximately 28% of the total 2018 green bond issuance in Sweden.

    SCBC’s inaugural green covered bond is the first green covered bond in SEK to finance real estate loans and mortgages. As expected, the green bond has a five-year maturity. It pays a 0.75% annual coupon and received demand in excess of SEK 14 billion, which allowed it to be priced at a 29 bps over mid-swaps, 2bps below the original guidance. Swedish investors represented 90% of the demand, fund managers purchasing 41%, insurance and pension funds another 31% and banks 24%. SCBC, the Swedish Covered Bond Corporation, is a subsidiary of Statens Bostadsfinansieringsaktiebolag (SBAB).

    “The SCBC green covered bond, the largest green bond ever issued in SEK, marks new possibilities for SEK green bond growth. Following the inaugural green covered bond by Landshypotek Bank last year financing sustainable forestry, the SCBC green covered bond is the first to finance real estate loans and mortgages. Covered bonds constitutes almost half of all outstanding bonds in SEK, this door is now truly open for green bonds,” says Lars Mac Key, Head of DCM Sustainable Bonds at Danske Bank.

    Klövern AB is a publicly traded property company listed on Nasdaq Stockholm with SEK 47 billion worth of properties as of 2018 Q3. Of this stock, 83% is office space, 11% is warehouses and 6% is retail, spread between Stockholm, Gothenburg, Copenhagen and, since 2018, New York. With SEK 8.8 billion in outstanding bonds, Klövern is one of the larger high yield issuers in the Nordic region.

    The issuance tapped an existing floating rate green bond series that was launched in April 2018 and matures in April 2022. The security pays 400bps over the 3-month STIBOR and was priced at mid-swap +485bps. Asset managers purchased 46% of the securities, followed by pension and insurance companies (26%), banks (22%) and other undisclosed investors (5%). Geographically, investment was concentrated in the Nordic countries (69% from Sweden, 12% from Norway, 8% from Finland and 9% from Denmark).

    According to Klövern’s Green bond framework, “proceeds from Klöverns’ Green Bonds will be used to finance or re-finance, in part or in full, Eligible Green Assets (as defined below) providing distinct environmental benefits”

    The bond deal from Vasakronan was a private placement for which there is no publicly available information. All three deals were managed by Danske Bank.

    Picture © Shutterstock

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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