Stockholm (NordSIP) – Green bond issuance by real estate companies is one of the dominating themes of sustainable investing in the Nordics. In one of the most recent additions to this wave, Swedish property owner Kungsleden issued a new 6-year SEK700 million green bond at the end of September. The transaction came off the heels of similar green bond issuance by other real estate companies such as Nivika, Bonava and Arwidsro.
The bond matures on 25 September 2026 and was issued in two tranches. SEK550 million was issued in fixed-rate bonds that pay a 1,593% interest rate. Another SEK150 million was issued as a floating-rate note pays a spread of 150 basis points (bps) above the 3-month STIBOR. The transaction is the second green bond by Kungsleden, after its inaugural March 2018 SEK2 billion issuance. That transaction was also divided into fixed and floating-rate tranches, which paid 2.38% and 205bps over 3-month STIBOR, respectively.
Kungsleden is a long-term property owner focused on commercial properties in Sweden and is listed on the Nasdaq Stockholm Large Cap (KLED). As of 30 June 2020, the company owned 210 properties with a total value of SEK 39,4 million. The proceeds from this transaction are to be used for energy efficiency/green buildings, renewable energy production and clean transports. The company’s green bond framework was reviewed by CICERO Shades of Green in 2018 when it was awarded a Medium Green rating, which applies to “projects and solutions that represent steps towards the long-term vision but are not quite there yet.”
Kungsleden reported that is had decided to swap the fixed-rate loan into a floating-rate loan. The borrower also announced it would repurchase the short-term bonds that fall due for payment in 2021 with a total nominal amount of SEK 218 million.
“We can conclude that there is a good demand from investors for Kungsleden’s green bonds. So far, we have issued a total of SEK 2 billion in green bonds during the year. This issue enabled Kungsleden to establish a new, lower price point in the market and will improve further our already good liquidity position. Green financing now makes up 36 per cent of our loan portfolio,” says Ylva Sarby Westman, Deputy CEO and CFO at Kungsleden.
Image courtesy of Kungsleden