Klövern Issues Medium Green Bond


Stockholm (NordSIP) – As we enter the last quarter of 2020, Nordic sustainable investors do not seem to be showing any signs of losing their appetite for green Swedish real estate bonds. On October 6th, Swedish real estate company Klövern issued a SEK2 billion 3.5 years green bond.

As of Q2 2020, the property portfolio consisted of 348 properties valued at SEK 56.1bn with aWAULT of 3.5 years. Approximately 40% of the portfolio is located in the metropolitan area of Stockholm, with other investments in Gothenburg, Västerås, Copenhagen and NewYork. The company has 5 outstanding bonds worth SEK6.45 billion.

- Promotion -

The green bond pays a floating rate coupon of 325 basis points (bps) over the three-month STIBOR, in line with initial price indications. Danske Bank, Swedbank and Nordea were the dealers on this transaction.

A total of 70 investors participated in the transaction. Domestic demand was dominant with Swedish investors taking 86.9% of the bonds. Norwegian investors purchased another 9.5% of the bonds, followed by investors domesticated in Denmark (2.7%) and Finland (0.8%). Sectorally, asset and fund managers purchased 71.6% of the bonds, leaving Retail investors (14.9%), pension funds and insurance companies (7%) and banks (6.2%) to take the rest.

Klövern’s green bond framework was updated in the beginning of October 2020 and has received a “medium green shading” from external reviewer CICERO Shades of Green. The framework enables financing of green and energy-efficient buildings, renewable energy projects and city development projects that improves biodiversity and resilience. Klövern issued its inaugural green bond in 2018, followed by several tap issues, but this issue is the first green bond issued under their updated green framework.

Image by Sotirios Karaoulanis from Pixabay

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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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