Stockholm (NordSIP) – Both Vattenfall and SBAB, broke new ground during June. Vattenfall, a Swedish power company, issued its first green bond worth € 500 million, while SBAB Bank issued the first green senior non-preferred bond, worth SEK 3 billion.
Vattenfall‘s seven-year bond pays a 0.5% coupon and was priced at a 99.637% discount, equivalent to MS+55bps to yield 0.553%. The security was issued under Vattenfall’s EMTN program and is governed by Swedish law. Citi, Deutsche Bank, Nordea and SEB acted as joint bookrunners on the bond issue and the green bonds are listed on Nasdaq Stockholm.
“We have seen very strong interest in our first green bond, among European investors,” commented Anna Borg, Vattenfall’s CFO. “I am happy that so many investors have chosen to participate in our bond offer, and chosen to contribute to our vision of a fossil-free life within one generation.”
The proceeds from Vattenfall’s bond are earmarked for renewable energy and related infrastructure, energy efficiency, electrification of transport and heat, and industrial projects defined in Vattenfall’s green bond framework. Cicero rated Vattenfall’s green bond framework “Dark Green”, its highest rating.
SBAB’s debt issuance was divided into two five-year tranches. A SEK 750 million fixed rate note pays a 1% coupon and was priced at MS+93bps. The remaining SEK 2.25 billion were issued in floating rate notes that pay 93bps over the three-month Stibor. Strong demand allowed the green bonds to be priced 2bps below initial guidance. Order books swelled to SEK 4 billion as Swedish investors (80%) and asset managers (61%) dominated demand. Geographically, demand was focused on the Nordic region with Norwegian (12%), Finnish (4%) and Danish (2%) investors picking up the majority of the remaining debt, leaving only 2% for non-Nordic investors. Sectorally, insurance and pension funds picked up another 27% of the bonds followed by local regions (6%) and corporate and other investors (6%).
“We were very encouraged to see so much interest in SBAB from such a broad range of investors during the issuance of this green senior non-preferred bond,” commented Fredrik Jönsson, Head of Treasury at SBAB. “This transaction demonstrates our ambition to drive continuity in the market for green bonds and constitutes an important strategic step in our work to meet the minimum requirement for write-down liabilities that the Debt Office has decided on until January 2022.”
SBAB’s green senior non-preferred bond is the first to comply with the Swedish Debt Office’s (Riksgalden) minimum requirement for write-down debts (MREL) established in a memorandum at the end of 2017, regarding how banks and other institutions in Sweden are to be managed in a crisis. According to SBAB, its total MREL-requirement is currently set at 5.1% of Total Liabilities and Own Funds. SBAB estimates that its total need for MREL debt is around SEK 24 billion, of which approximately SEK 12 billion is the recapitalisation amount, which is to be covered with senior non-preferred debt.
“We aim to support both housing and capital markets in a more sustainable direction and it is therefore very rewarding to see such great interest in this bond,” said Klas Danielsson, CEO SBAB. “We are convinced that climate change requires a holistic perspective and it is important for to be green, from borrowing to lending, ”
SBAB has previously issued three green bonds, corresponding to a volume of SEK 9.75 billion. In January, the SBAB Group became the first player in Sweden to issue a green covered bond with mortgages and property loans as collateral.
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