Stockholm (NordSIP) – Fastighets AB Balder entered the Green Bond market on June 4, with a five-year SEK 1 billion inaugural senior unsecured transaction. The bond pays a floating rate of Stibor + 158bps, and its proceeds will be used according to Balder’s Green bond framework.
“Balder has previously had green loans from both banks and the EIB, so it is a natural step to also issue green bonds,” commented Marcus Hansson, CFO of Balder, on the occasion of this transaction.
Balder maps its green bond framework onto six UN Sustainable development goals, including SDG7 – Affordable and clean energy, SDG11 – Sustainable cities and communities and SDG13- Climate action, as well as SDG9, SDG12 and SDG8. “By constructing new housing with mixed forms of usage Balder contributes to breaking the separation and increasing security,” the real estate company explains in its Green Bond Framework. “Further, mixing work and housing gives more work opportunities in the local environment and creates new meeting places. Solutions for increased mobility, such as proximity to public transport, bicycle paths and electric carpools are also prioritised in the development of properties and areas.”
According to the framework, proceeds from the green bonds will be targetted at Green and energy efficient buildings consistent with the Miljöbyggnad “Silver” certification (or better), LEED “Gold” certification (or better), BREEAM “Very Good” certification (or better), Nordic Swan Ecolabel, BREEAM in-use “Very Good” (or better) and the Nearly zero-energy buildings.” The funds can also be used for projects to improve the energy efficiency by at least 25 % as well as investment to increase the share of renewable energy used in its operations, and buildings. The latter can be done through the acquisition of equipment relevant for types of renewable energy sources, such as solar power or geothermal energy solutions.
Balder enjoys an investment grade rating of Baa3 with a positive outlook and BBB with a stable outlook from Moody’s and S&P, respectively. Moreover, the Green Bond Framework received a “Medium Green” rating from CICERO, whose report described the real estate company’s governance as “good”. “Balder is encouraged to consider construction phase emissions, screen for physical climate risks and systematically work on reducing emissions related to transportation to and from the properties,” to increase its green rating to Dark Green, according to CICERO’s second opinion. The top concern highlighted in CICERO’s report was that “eligible buildings could be heated directly by fossil fuels” in some of the countries that Balder operates, such as the UK and Germany.
Balder’s bond is one the latest in a very hot green bond market which saw US$ 23.8 billion being issued in May alone, the most popular month so far this year, according to the Climate Bonds Initiative (CBI). So far this year US$ 90 billion worth of green bonds have been issued, 53% of the amount CBI estimates was issued last year and 36% of the US$ 250 billion total expected issuance for 2019.
Balder is a listed real estate company with a real estate portfolio of SEK 123.2 billion as of 31 March 2019. Balder owns, manages and develops residential and commercial properties and hotels in Sweden, Denmark, Norway, Finland, United Kingdom and Germany. Balder shares are listed on Nasdaq Stockholm, Large Cap.
Picture from Pixabay