Stockholm (NordSIP) – The Nordic Investment Bank (NIB) issued its first, €1 billion NIB Response Bond on Monday, March 30th. Funds from this transaction will be channelled to social and economic projects related to COVID19 in Sweden, Norway, Denmark, Iceland, Finland, Estonia, Latvia and Lithuania.
According to the NIB, “eligible projects for financing with the Response Bond proceeds will mainly promote the efficient operation of healthcare systems, and provide financial support and labour market solutions to alleviate frictions to supply chains.”
“Swift and bold actions are needed to alleviate the effects from the pandemic, and NIB’s Governors have urged the Bank to increase lending to businesses affected by the crisis in the region,” says Lars Eibeholm, Head of Treasury at NIB. “The NIB Response Bond is our first reply to raise funding and back these actions. The Response Bond framework supports us in providing transparency and in communicating a clear strategy to investors and stakeholders.”
The bond is due in April 2023 and does not pay a coupon. Following €3.2 billion in bids from 80 investors, the bond was priced at a 102.31 premium to yield 48.7 basis points (bps) over the underlying German government bond. Geographically, most of the demand (73%) was concentrated in Europe, of which 12% in the Nordics, Asia represented a little over a fifth of the demand. Sectorally, Central banks and Official institutions purchased over half of the securities, leaving the rest to Banks (24%), Fund Managers (12%) and Pension Funds, Insurance companies and corporate treasuries (6%). Among these, NordSIP has been able to confirm that Dutch pension fund PGGM invested €20 million on behalf of Pensioenfonds Zorg en Welzijn. BNP Paribas, Danske Bank, HSBC and JP Morgan acted as Joint Lead Managers on this Transaction.
“It’s great to see the Nordic Investment Bank acting so swiftly to step-up and respond to the COVID-19 crisis by issuing their inaugural ‘Response Bond’ with use of proceeds dedicated to lending to companies dealing with the serious consequences caused by the pandemic. A great result for the Nordic Investment Bank and a fantastic outcome for the Nordic region. Danske Bank is proud to have supported the Nordic Investment Bank on this important transaction,” says Gustav Landström, Global Head of SSA Origination at Danske Bank.