NIB Issues Baltic Sea Blue Bond

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    Stockholm (NordSIP) – In the wide range of environmental assets available to investors, Blue bonds are an often forgotten opportunity to contribute to the sustainability of seas, lakes and rivers. One of the leading issuers of this type of security is the Nordic Investment Bank (NIB), the regional development bank of Denmark, Norway, Sweden, Iceland, Finland, Estonia, Lithuania and Latvia.

    On October 6th, the NIB launched a new SEK1.5 billion five-year blue bond aimed at financing projects within water management and protection in the Baltic sea. The bond pays a 0.1% annual coupon.

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    Transaction Details

    Strong demand from 13 investors Nordic investors brought order books to SEK2.5 billion leading the bonds to provide a spread of 2 basis points (bps) over Mid-Swaps, pricing at a 99.945 discount for a reoffer yield of 0.111%. Danske Bank and Swedbank were the joint lead managers on this transaction

    Investors included the Folksam Group, Svenska Handelsbanken Asset Management, Nordea Asset Management, Robur Asset Management, Skandia Liv and Storebrand Asset Management. The dominance of these Swedish companies was clear in the final investor distribution where Sweden accounted for 95% of investors, with Finland providing another 4% and the rest of Europe only taking up 1% of the notes. Sectorally, fund managers represented 60% of investors, followed by pension funds and insurance companies which purchased another 30% of the bonds. Another 8% went to banks while retail investors purchased the remaining 1%.

    Investing in the Baltic Sea

    “The Baltic Sea is the sea of our member countries,” Luca De Lorenzo, Head of Sustainability and Mandate at NIB, said. “It remains one of the most polluted seas in the world, with eutrophication being by far the largest impact on its ecosystem. This blue bond shows NIB’s continued commitment on protecting our water resources – it is only through constant, firm action that we can restore the much-needed health of our water ecosystems.”

    “As one of the leading responsible investors in the Nordics, we are conscious of the challenges facing the region’s water resources, especially those affecting the Baltic Sea,” Per-Erik Grahn, Portfolio Manager at Nordea Asset Management, added. “Nordea AM is thus thrilled to participate in NIB’s Nordic-Baltic Blue bond supporting projects that directly target water-related investments in the Baltic Sea.”

    “We are happy to follow up on our previous engagement with NIB’s blue bond initiative, and continue to participate in their ambitious work to support the recovery of the Baltic Sea,” Ola Björkman, Portfolio Manager at Robur Asset Management, commented. “This funding opportunity is well aligned with Swedbank Robur’s high focus on sustainability and will contribute to release pressure from the marine and coastal environment through projects related to wastewater treatment and water pollution prevention.”

    “There is no question that NIB is on the cutting edge for innovation in how to finance climate change, Helena Lindahl,” Portfolio Manager at Storebrand Asset Management, explained. “We at Storebrand are happy to participate also in this second Nordic-Baltic Blue bond following up their internationally recognized and awarded inaugural blue bond last year. How can we get more issuers and more investors to address SDG 6?”

    Dealer Comments

    “A great outcome for NIB returning to the SEK market for their second Blue Bond transaction following the inaugural issue in 2019,” Gustav Landström, Global Head of SSA Origination at Danske Bank, commented. “The market had been looking forward to this issue for some time so we were not surprised to see the level of interest this transaction generated enabling a very attractive pricing for NIB. We are very proud to have participated in this important transaction supporting water measures in the Nordic-Baltic region.”

    “I would like to congratulate NIB on a successful second SEK blue bond transaction,” Linda Lindblad, Head of SSA Origination at Swedbank added. “The investors in this deal supported important projects for the environment in the Nordic-Baltic region. At the same time, these investments secure vital infrastructure in NIBs member countries.”

    Image by PublicDomainPictures from Pixabay

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.
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