Stockholm (NordSIP) – Kommuninvest issued a five-year SEK 3.5 billion green bond on Wednesday, March 20. This is the sixth green bond issued by this the municipal lender and the fourth in SEK.
The final terms of the deal were in line with expectations. The bond pays a 0.375% coupon and was priced at a 99.42 discount to give a spread of MS+6bps, 1.5 bps below initial guidance. Order books closed above SEK 6.4 billion. “The Green premium, ‘Greenium’, at the point of pricing, was agreed to be 2bps through the fair value of the interpolated Kommuninvest SEK benchmark curve,” according to the transaction summary.
With SEK 23.9 billion outstanding from six green bonds, Kommuninvest is the largest Swedish Green bond issuer. “It’s been a fantastic start to the year for green bonds globally and SEK in particular. With this deal from Kommuninvest, a total of SEK 40 billion has been issued in green bonds, corresponding to 20% of all bonds issued in SEK year to date. In two and a half months the market has exceeded all of 2017’s issuance and it is more than half-way through the record SEK71 billion issued in 2018,” says Lars Mac Key, Head of DCM Sustainable markets at Danske Bank.
The new green bond attracted a total of 21 domestic and international institutional investors, including Alecta, Catella, Folksam, LF Bank Treasury, Länsförsäkringar Liv, Sak and Fondliv, Nordea Investment Management, Robur, SEB Investment Management, SEB Treasury, SHB Treasury, Skandia and Storebrand Asset Management / SPP Fonder, according to the press release.
“We constantly look for investments that combine financial value with a green profile. Our investment in Kommuninvest’s green bond makes it possible to stimulate the green transition of municipalities while we create good returns and contribute to better pensions for our customers,” says Alexander Onica, Portfolio Manager at the pension company Skandia.
Sectorally, demand was dominated by pension funds, which purchased 50% of the funds, followed by asset managers’ 36%, and banks’ 13%. Although investors from six countries participated in this deal, 98% of the demand came for this security came from Sweden, which explains the lack of need for a roadshow.
“We are pleased to see the continued strong investor interest and good pricing for our green bonds in SEK. Sweden currently has one of the world’s most developed markets for green financing and an increasing supply of green bonds. Lower funding costs for green bonds demonstrate the value of these instruments and makes it easier for Kommuninvest to stimulate the municipal sector’s green transition,” Christian Ragnartz, Head of Debt Management at Kommuninvest, commented.