Nordics Welcome EIB‘s First Taxonomy-Aligned SEK CAB

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Stockholm (NordSIP) – As European green investors finalise their preparations to incorporate the new definitions imposed by the EU taxonomy into their investment process, the European Investment Bank (EIB) has taken the lead in providing investment opportunities aligned with the new framework. On September 8th, the EIB issued a SEK1.6 billion ten-year green bond whose funds will be channelled to green projects aligned with the EU’s new definitions.

According to the EIB, this is the first SEK green bond with documentation tuned to EU Taxonomy Regulation. Under the new CAB documentation, proceeds will be allocated to EIB’s lending to activities that substantially contribute to climate change mitigation in line with evolving EU sustainable finance legislation. According to the EIB, the plan is to gradually align the CAB Internal Criteria with the EU Green Bond Standard proposed by the EC’s Technical Expert on sustainable finance (TEG) in March 2020. The recommendations explicitly require that EU green bonds be allocated to economic activities that match the requirements of the taxonomy.

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“The upcoming EU Sustainability Taxonomy will be the backbone of EU sustainable finance. The EIB is aligning the classification of its lending activities with this touchstone. This makes way for a wider range of projects to become eligible for allocation from CABs under new documentation,” said Eila Kreivi, Director and Head of Capital Markets at the EIB.

The bond pays a 0.375% coupon and was priced at 15 basis points (bps) over mid-swaps. Swedbank was the sole lead on this transaction. “Swedbank Robur fully support the objectives of the EU Taxonomy, including aligning our investments according to the Paris Agreement,” commented Thomas Bäck, Senior Portfolio Manager at Robur Fonder. “Thus, we are happy to invest in EIB’s first SEK issuance under the extended program for Climate Awareness Bonds financing activities beyond renewable energy and energy efficiency,” Bäck added.

Swedish investors represented the lion’s share of demand (84%), leaving another 15% to Danish investors and the remaining 1% to other miscellaneous European investors. Sectorally, fund managers/insurance companies/pension funds purchased 48% of the green bonds. Banks and asset and liability managers took home another 32% of the securities, leaving 20% to other miscellaneous investors.

“As a responsible investor, Länsförsäkringar Västernorrland is very supportive of EIB’s commitment to push for the green agenda by gradually aligning its loan portfolio with the new requirements presented by the EU Taxonomy,” Ola Svanqvist, Portfolio Manager at Länsförsäkringar Västernorrland said. “Our goal is to invest with the largest possible positive impact on the environment and participation in this particular bond issuance under the EIB’s extended CAB program is well aligned with our goal,” she concluded.

Image courtesy of EIB

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