EIB Launches DKK Inaugural Climate Awareness Bond


Stockholm (NordSIP) – On June 27, the European Investment Bank (EIB) issued a senior unsecured Climate Awareness Bond (CAB) denominated in Danish Krona, for the first time. We caught up with Lars Mac Key at Danske Bank, sole bookrunner for the issue, to understand how this issue stands out.

“This bond is the first DKK green bond issued by a Sovereigns, Supranationals and Agencies (SSA) entity and it represents an important milestone for the development for the SRI market in Denmark,” Mac Key starts.

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The order book was large, and its quality enabled the bank to upsize to a DKK3bn trade (€402m). The investor base was well diversified, and a significant proportion (92%) was placed in the Nordics. In total, 12 investors participated in the transaction with demand driven by high quality Danish institutional investors. “We noted a substantial involvement of SRI focussed accounts,” adds Mac Key.

“We were delighted to participate in this inaugural green issue from the EU bank in our core currency,” says Michael Nellemann Pedersen, Head of Investments at PKA, a Danish pension fund known for its sustainable investment efforts.

“This is a rare transaction,” says Mac Key. “EIB hadn’t issued in DKK since 2009.” While the response was strong, the 12-year senior unsecured zero-coupon CAB was priced competitively at 40bps below mid-swaps, equivalent to +27.7bps over DGB due 15-Nov-2029, pricing in line with EIB’s EUR CAB secondary curve.

According to Danske Bank, EIB remains the largest issuer of Green Bonds with over EUR 24.8bn raised across 12 currencies (as of February 22 2019). “EIB is the first issuer to link use of green bond proceeds to activities that contribute to climate change mitigation in line with evolving EU sustainable finance regulation and the related technical expert proposals. This link sets the stage for a gradual extension of eligibility criteria in line with evolving EU legislation,” says EIB in a press release.

“The strong response to this rare transaction proves the attention of long-term sustainable investment to the EU initiatives on sustainable finance, notably the relevance of the EU Sustainability Taxonomy that has just been published by the TEG,” says Eila Kreivi, Director and Head of Capital Markets at the EIB.”

“ATP values EIB’s CAB bonds for the transparency and accountability they generate in sustainable finance. We acknowledge EIB’s effort to align with the EU Green Bond Standard via linking to the EU Sustainability Taxonomy and the external verification of both allocation and impact reports,” says Lars Dreier Kristensen, Senior Portfolio Manager at Danish pension ATP.

Picture Wikicommons, NordSIP

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