The First Icelandic Social Bond

    Stockholm (NordSIP) – Reykjavik Social Housing (RSH) announced it had issued the first social bond in Iceland, worth ISK6.4 billion (€46m). The bonds, guaranteed by the city of Reykjavik, were sold through a private placement to yield 1.90%. The new social bond series matures in 2056, pays a fixed real interest rate and will be listed on the Nasdaq Iceland Sustainable Bond market.

    RSH is a non-profit company owned by the Icelandic capital city of Reykjavik with the sole purpose to provide affordable social housing. It is Iceland’s largest provider of affordable social housing and the largest housing leasing company in Iceland.

    Proceeds from this issue will be used to support further investments in rental housing as RSH aims to increase their current apartment portfolio by at least 500 units by 2022. Social Bonds are bonds which are issued to finance specific projects which have positive social impact. One of the primary drivers of such bond issuances is to familiarise investors and increase demand for socially responsible investment options.

    The bond issuance follows the publication of RSH’s Social Bond Framework, which is aligned with the social bond principles published by the International Capital Market Association (ICMA). The framework has received a second opinion from Sustainalytics, a global leader in ESG research and ratings. The second-party opinion states that Sustainalytics considers RSH‘s social framework “robust, credible and transparent, and in alignment with the four core components of the ICMA’s Social Bond Principles 2018”.

    “The availability of stable and affordable housing is a basic human right and is of key importance to the economic vitality of communities, underpinning good health and the social, educational and economic participation of individuals,” RSH explains. “Social housing provides secure and affordable housing not available in the private market, striving to ensure that all individuals and families have access to safe and affordable homes, regardless of social or economic status.”

    Reykjavík’s policy is for affordable social housing to represent 5% of all residential housing in the city, whose residents account for 36% of the total Icelandic population.

    Image © RHS

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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