NIB issues Second COVID19 Response bond


Stockholm (NordSIP) – On Thursday, April 2nd, the Nordic Investment Bank (NIB) issued a SEK4 billion 3-year Response Bond aimed at procuring the funds necessary to finance the fight against the Coronavirus.

The funds from this transaction will be used to lend to the public sector, especially to finance increased capacity in healthcare services, temporary increases in social services, including unemployment and leave, lending to financial institutions to maintain market liquidity. The NIB is also able to make direct loans to the real economy, particularly to finance large companies in the medical equipment and healthcare sector “facing an increasing demand for equipment or services related to the pandemic”, among others.

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The bond pays a 0.125% coupon and was priced at a 99.681 discount to yield 0.235%, to provide a spread of 13bps over mid-swaps after book orders swelled to above SEK5.2 billion. SEB and Swedbank acted as joint lead managers on this transaction. Geographically, Swedish investors represented 78% of investors, followed by Danish (11%), Finns (6%), Czech (4%) and Latvian (1%) investors.  Sectorally, banks purchased 40% of the bonds, followed by another 29% from pension and insurance companies, 27% from fund managers and 4% to central banks.

“The SEK 3 year 4 billion NIB Response Bond is a testimonial that there is significant support to the serious consequences caused by the COVID-19 pandemic”, says Jens Hellerup, Head of Funding and Investor Relations at NIB. “We are very pleased to see Swedish and international investors responding swiftly in this serious situation. We were able to upsize the deal, based on an order book in excess of SEK 5.0 billion. This is NIB’s second response to the COVID-19 pandemic, following the EUR trade earlier in the week”.

“We would like to express our appreciation of the Nordic Investment Bank and their initiative to ease the economic and social consequences of the pandemic that we are now experiencing,” says Ylva Wessén, CEO at the Folksam Group. “For the Folksam Group, as an insurance provider to almost every second Swede, it feels very good to be able to make an investment which will have an immediate beneficial impact for our customers.”

This is the second Response bond issued by the NIB in four days and the first transaction related to the COVID19 pandemic in Swedish Krona. The day before the NIB conducted this transaction, the European Investment Bank issued a SEK3 billion three-year Sustainable Awareness Bond (SAB) for similar purposes. Other issuers of COVID19 bonds include the African Development Bank and the Inter-American Development Bank.

Image courtesy of NIB

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