Stockholm (NordSIP) – On May 27th, SpareBank1 Boligkreditt (SPABOL) issued its inaugural SEK7.5 billion Green Covered bond. The debt will fund new and existing mortgages for energy-efficient residential buildings in Norway.
The five-year green floating rate note pays 75 basis points (bps) over the 3-month STIBOR and was priced to provide a re-offer spread of 35bps over mid-swaps, at the low end of its initial guidance. Demand was strong with book closing at over SEK9.4 billion. Geographically, Danish investors represented 54% of the securities, while Swedes represented the remaining 46%. Sectorally, fund managers purchased 55% of the green covered bonds, followed by bank 32% share, leaving the remaining 13% to insurance companies and pension funds. Danske Bank acted as joint bookrunner.
SPABOL is the covered bond issuer of the Norwegian SpareBank1 Alliance founded in 1996, which includes fourteen banks, covered bond issuers and other financial services companies operating exclusively in Norway. This transaction in Swedish Kronor was SPABOL’s second Green Benchmark following its inaugural Euro Green Coveredbond in 2018. The issuer’s green bond framework is certified by the Climate Bonds Initiative and rated “GB1” by Moody’s and “b+” by ISS Oekom.
In what was the first instance of a Green covered bond assessment from Moody’s back in September 2018, the credit rating issuer note that the “SPABOL has very strong disclosure on the use of green bond proceeds, supported by clear descriptions of the various eligibility criteria. In addition to these criteria descriptions, SPABOL has provided a summary of the portfolio of eligible assets, broken down by building value and residential area.” On that same occasion, ISS Oekom argued that SPABOL “has created a sound and transparent green bond framework with clear environmental benefits”, but noted it lacks a “comprehensive approach regarding specific social risks of residential mortgages,” as a weakness.
The funds will finance the top 15% most energy-efficient buildings of the local building stock and refurbished buildings which achieved energy savings of at least 30% in comparison to the baseline performance of the building before the renovation.