Swedish Investors Rush to EIB COVID-19 Bond


Stockholm (NordSIP) – On Wednesday, April 1st, the EIB issued a new SEK3 billion three-year Sustainable Awareness Bond (SAB) to fund the fight against COVID19 across Europe.  Robur AM, Skandia and Länsförsäkringar Liv were confirmed to have invested in this transaction.

First launched in 2018 with an initial focus on water projects, the SAB framework was extended to the area of health projects in late 2019, to also target the third UN Sustainable Development Goal (SDG 3), Universal Access to Affordable Health Services. SABs complement the EIB’s Climate Awareness Bonds (CABs) by extending the same transparency, accountability, and comparability from climate to further areas of environmental and social sustainability. Total SABs outstanding exceed €1.7 billion with three lines in Euro and Swedish Krona.

- Promotion -

Among other things, the EIB signalled that the funds would go towards fight the Coronavirus by buying medical and non-medical equipment, including ventilators, beds, and home care equipment. The funds can also be used to pay for works to convert facilities into emergency and intensive care units, temporary single-speciality facilities for COVID19 treatment, staff and vehicle costs, among others.

“The COVID-19 crisis is a challenge for Europe as a whole,” Andrew McDowell (Pictured), Vice President at the EIB commented. “It needs to be addressed in a concerted manner, and the Bank of the European Union is a cornerstone of Europe’s strategic response. Critical priorities, notably in the healthcare sector, need to be tackled with the full support of responsible and engaged capital markets. SABs will shed light on our course of action with the clarity and accountability required within the framework the EU is shaping to facilitate sustainable investment.”

The reoffer spread was MS+15bps. Given the denomination of this bond it is not surprising to see that geographically, demand was dominated by Swedish investors, who represented 87% of the investors, followed by investors in Denmark(10%), the UK(2%) and Japan (1%). Sectorally, Banks purchased 42% of the bonds, followed by asset manager’s 28%, corporates’ 16, pension and insurance companies’ 13% and another 1% to other miscellaneous investors. Nordea and Swedbank acted as joint lead managers.

“Through this investment in EIB’s Sustainability Awareness bond, we get the opportunity to support the European continent in responding to the COVID 19-crisis,” said Jacob Karlsson, CEO, Länsförsäkringar Liv. “This issuance also aligns with our focus as a responsible investor and our ambition to achieve sustainable value creation. We value in particular the measurable contributions from this issuance to UN SDG 3 ‘Ensure healthy lives and promote well-being for all at all ages.’”

“We welcome the opportunity to support actors in the fight against the COVID 19 crisis, whilst also raising awareness towards important global sustainable development goals such as SDG 3: `Ensure healthy lives and promote well-being for all at all ages’,” added Olof Klockhoff, Portfolio Manager at Skandia.

Image courtesy of the EIB

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The coronavirus epidemic has further accelerated the rise of ESG into the investment mainstream. As deficits skyrocket, bond investors have an opportunity to engage with governments on climate change, argues Thomas Dillon, Senior Macro ESG Analyst at Aviva Investors.

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