Stockholm (NordSIP) – The European Investment Bank (EIB) issued a NOK2 billion three-year green bond, the first Climate Awareness Bond (CAB) denominated Norwegian Krone. According to the EIB, the security incorporates documentation consistent with the evolving EU legislation and upcoming EU Sustainability Taxonomy.
Taxonomy Consistent
According to the EIB, the NOK CAB uses new documentation which guides its proceeds to activities contributing substantially to climate change mitigation in line with evolving EU sustainable finance legislation. The transaction came on the same day as the Council of the European Union formally adopted a Regulation establishing a framework to facilitate sustainable investment. T
The EIB is the first issuer to have tuned the documentation of its green bonds to the upcoming Taxonomy to allow the lending to expand in line with EU legislation.
“The COVID-19 emergency highlights that climate, environmental and social crises are interdependent,” Eila Kreivi, Director and Head of Capital Markets at the EIB commented. “They need to be addressed in a coordinated fashion, within a coherent model of sustainable development. With its legislation on sustainable finance, the EU is clarifying what its operational objectives are and how the significance of investments can be defined and measured. This will enhance effective capital deployment along the entire investment chain. EIB is pioneering implementation through Climate and Sustainability Awareness Bonds. Today’s transaction reflects new dedicated support from Nordic investor circles.”
Strong Investor Demand
The bond pays a 0.625% coupon and saw strong enough demand during the pricing process to increase the issuance amount from its initial NOK1.5 billion target, leading to a re-offer spread of 13 basis points over the 3-month NIBOR rate. DNB Bank acted as sole lead manager. Demand was geographically dominated by Norwegian investors who purchased 95% of the securities, while the remaining was allotted to investors in other undisclosed locations. Sectorally, banks purchased 73% of the green bonds, leaving the remaining 27% to asset managers, according to the EIB. Notable investors included Nordea Life and Pension and Sparebank.
“Nordea Liv and Nordea Investment Management are proud to invest in a CAB, and by doing so we can support lending to activities contributing substantially to climate change mitigation,” said Leif-Rune Rein, CEO of Nordea Life and Pension and Linn Yver, Portfolio Manager at Nordea Investment Management. “This aligns well with Nordea Livs strategy and our commitments as a member of the Net-Zero Asset Owner Alliance. The completion of the transaction proves there is a market for sustainable bonds in the Norwegian market, and we hope to see more activity in the coming time”.
“Investing in this CAB is very important for our green and social focus coming forward. We are very pleased that EIB chose to come to the NOK market with a CAB,” Per Egil Aamo, Deputy Head of Treasury at Sparebank 1 SMN added. “This bond demonstrates EIB’s commitment towards the Norwegian investors and will contribute to a broadening of the Norwegian green bond market. EIB’s work on CAB and their alignment of documentation with the evolving green taxonomy is highly valued for us.”
As of 16 April, the EIB has raised over €33 billion, equivalent to 55% of the announced €60 billion 2020 funding programme.
Image © EIB
