Tornator Issues Forestry Green Bond


Stockholm (NordSIP) – While a substantial amount of green bonds issued in the Nordics come from real estate companies and sovereigns like Sweden and Denmark grab all the headlines, forestry is also an important source of green finance in the region. On October 14, Tornator Oyj, a forestry company specialized in sustainable forestry activities in Finland, Estonia and Romania, issued €350 million in inaugural six-year green bonds.

“The green bond highlights Tornator’s commitment to sustainable forestry and climate responsibility”, says Antti Siirtola, Tornator’s Chief Financial Officer at Tornator. “Responsible use of forests, consideration of environmental values and care for biodiversity are part of Tornator’s everyday operations. Thus, obtaining green funding was a natural choice for us. The green bond is a continuation to the green bank loan financing agreed in the spring 2020. With these transactions, most of Tornator’s debt financing is green.”

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The bond pays a 1.25% coupon and was priced at a re-offer spread of 165 basis points (bps) over Midswaps, 35bps below initial price thoughts. The price was brought down by €880 million worth of bids from 79 investors. Geographically, demand was dominated by the Finnish domestic market, which purchased 65% of the bonds, leaving another 18% to be bought by other miscellaneous Nordic countries. German (7%), French (5%) and other undisclosed investors (5%) invested in the rest of the bonds. Sectorally, asset managers purchased 42% of the securities, followed by 37% from insurance companies and pension funds and 18% from banks, leaving 1% to other miscellaneous entities. Danske Bank and SEB acted as Joint Lead Managers.

The Green Notes are secured by certain forest properties owned by Tornator. The funds from green bonds will be used in accordance with Tornator’s Green Finance Framework, launched in October 2019. The issuer was rated, dark green, by CICERO Shades of Green, the highest rating available.

According to the second opinion, “Tornator has a well-established sustainability profile but we encourage even greater emphasis on future issues which may affect its resilience to climate change. Tornator has in place sound sustainability policies, which are reported on annually. They are largely driven by FSC certification requirements and Finnish forestry law and regulations. The company has a long-term business plan, but more emphasis could be given to climate scenarios and resiliency thinking.”

Image by Pekka Kiirala courtesy of Tornator

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The coronavirus epidemic has further accelerated the rise of ESG into the investment mainstream. As deficits skyrocket, bond investors have an opportunity to engage with governments on climate change, argues Thomas Dillon, Senior Macro ESG Analyst at Aviva Investors.

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