Stockholm (NordSIP) – Hemfosa Fastigheter AB issued SEK 1.3 billion in floating rate green bonds maturing in 2022 that pay 240bps over the 3-month STIBOR. This bond issuance corresponds to 86.7% of Hemfosa’s total green bond framework, worth SEK 1.5 billion.
Hemfosa is a Swedish real estate company and one of the largest private owners of community service properties in Sweden and the only listed property company with this specialisation. Its properties include police stations, schools and hospitals.
According to Hemfosa’s green framework, the funds from the green bond will finance or refinancing projects relating to green properties and investments in energy efficiency, including buildings with certificates such as Miljöbyggnad Silver, GreenBuilding and Passivhus, and buildings with energy consumption 25% below national building requirements. Hemfosa intends to apply for listing of the new bond loan on Nasdaq Stockholm’s Sustainable Bond List.
“We are very pleased to issue Hemfosa’s first green bond, which in addition was met by great interest among investors,” says Linda Eriksson, Head of Finance of Hemfosa. “It is a form of financing that fits with Hemfosa’s business in community service properties and complements our other financing well. We already have green bank loan financing and believe that different forms of green financing will be increasingly relevant both for us and the real property industry in general.”
The Green bond framework was rated “Medium Green” by CICERO, citing concerns that “Hemfosa has not incorporated the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD) and doesn’t have any policy in place on how to manage physical climate risks.” CICERO pointed out that “a 25% reduction in energy use is not enough to be in line with the IEA ‘well below 2 C’ target. The issuer should be conscious of the improvement in standards that will be required over time in order to reach the 2050 targets.” CICERO justified not awarding Hemfosa its highest “Dark Green” rating based on the fact that that rating “is reserved for the highest building standards such as ZeroEnergy buildings and passive houses”, which are more stringent standards than the ones used by the framework. Nevertheless, CICERO’s overall assessment of the governance structure of Hemfosa’s Green Bond Framework “Good.”
Swedbank and Nordea acted as dealer managers, bookrunners and tender agents. Swedbank also acted as an advisor regarding the establishment of the framework for green bonds and Second Opinion. Cederquist has acted as legal adviser.
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