Stockholm (NordSIP) – Danske Bank issued € 500 million in green bonds on Wednesday, March 13. This transaction is Danske Bank’s first issuance from its new framework and will be used to finance projects that promote the transition to low-carbon, climate resilient and sustainable economies.
“This year has seen a strong growth in the green bond market, and we are very proud to be among the banks globally leading this growth and enabling the transition to a greener economy,” said Lars Mac Key, Head of DCM Sustainable Bonds in Danske Bank.
The funds from this bond will finance or re-finance an initial portfolio of 23 green loans worth € 621 million. This portfolio is predominantly made up of Nordic hydropower plants and wind farms (€ 342 million). Another € 48 million corresponds to projects for electric trains, €204 million will go towards green buildings, and the remaining € 26 million will finance waste-to-energy power plants. The portfolio has an average weighted maturity of 2.8 years and is predominantly targeted at Finland (68%), but also Norway (18%) and Sweden (14%). “Like the green bond framework, the issuance supports Danske Bank’s commitment to further developing the green bond market and channelling capital into customers’ environmentally beneficial projects,” says Samu Slotte, Head of Sustainable Finance in Danske Bank.
Danske Bank’s green bond has a five-year maturity and pays a 1.625% coupon. The securities are non-preferred senior notes rated aa2, BBB+ and A by Moody’s, S&P and Fitch, respectively. This issuance was preceded by a roadshow across Helsinki, Paris, Frankfurt, London and the Netherlands, where Danske Bank met with around 45 prospective investors. Demand from 250 different accounts allowed the final order book to close at € 3.3 billion. The securities were priced at a reoffer spread of MS + 165bps, 20bps below initial guidance.
Sectorally, asset managers were the dominant investor in this security, purchasing 58% of the bonds. Another 21% went to banks, followed by 13% purchased by official institutions, 6% to insurers and pension funds and 2% for corporates. Geographically, demand was evenly distributed. Investors domiciled in France bought 21% of the securities. German and Austrian investors purchased another 18%, followed by domestic Nordic investors’ 16%. The remaining went to investors in Switzerland (10%), the Benelux (8%), Italy (3%), and other miscellaneous countries (6%).
“The positive reception clearly confirms that the interest in green investments is increasing with rapid speed, and it is a strong confirmation to the work we have done in regards to our Green Bond Framework,” says Bo Søndergaard, Head of SRI Bond Marketing. “We are seeing more green and ESG funds being launched, which I expect will lead to an increased interest in green bonds.”
Danske Bank announced the new framework for green bonds and loans, on March 5. Realkredit Danmark issued its first green mortgage bond to the Danish market on the same day.
“The transition to a sustainable economy with reduced CO2 emissions requires significant investments. We want to help provide more financing for sustainable and environmentally friendly initiatives, which also ties in well with our support of the Paris Agreement and the Sustainable Development Goals launched by the United Nations. We will therefore introduce solutions that will make financing new investments in climate-friendly buildings and technologies easier – or offer loans that will encourage businesses to adopt a more green profile,” Jeanette Fangel Løgstrup, Head of Societal Impact & Sustainability, commented on the occasion of framework launch.
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