Sparebank and Citycon Flood NOK market

    Stockholm (NordSIP) – While much is made of the flurry of real estate green bonds in the SEK market, Sweden is not the only source of sustainable fixed income activity in the Nordic region. Most recently, Citycon Treasury and Sparebank 1 SMN came to the market with NOK 4.05 billion worth of green bonds.

    On November 9th, Sparebank 1 SMN issued a NOK3.25 billion six-year dual trance senior preferred green bond. The largest tranche is a floating-rate note (FRN) worth NOK2 billion that pays 66 basis points (bps) over the 3-month NIBOR, 4 bps below initial price thoughts. The FRN was purchased entirely by Norwegian investors, 65% of whom were asset managers with the remaining 35% being made up of pension funds and insurance companies. Another NOK1.25 billion was issued in fixed-rate notes that paid a 1.4% coupon, 2bps above initial price thoughts. The transaction attracted a more international audience, but Norwegian investors remained 89% of the investors, with Swedes (5%), Danes (3%) and Finns (3%) making up the difference.  Asset managers (92%) and pension funds and insurance companies (8%) were once again the main investors. Strong demand from 30 unique accounts drove order books to NOK4 billion. Danske Bank acted as joint bookrunner on this transaction.

    SpareBank 1 SMN is a regional Norwegian bank present in 46 locations across 42 municipalities, serving 223,000 retail customers and 15,000 corporate customers. As a part of the bank’s sustainability strategy, the new senior preferred green bonds are issued under their updated green bond framework from August 2020. The framework is developed in line with ICMA’s Green Bond Principles. The framework supports several of UN’s sustainability targets where all loans in the underlying green loan portfolio support either one or several of said targets.

    Four days later, Citycon Treasury BV issued NOK800 million in green bond FRN maturing in 2023. The notes pay 280bps over the 3-month NIBOR, 40bps below initial price guidance, “flat to the company’s fair value curve in Euro,” according to Danske Bank. 30 investors swelled order books to NOK1.6 billion. This was Citycon’s first Geographically, demand was dominated by Norwegians (78%), with Finland (14%) and Sweden (8%) representing a small minority of investors. Sectorally, asset managers purchased 80% of the tickets, followed by pension funds (16%) and other undisclosed investors (4%).

    Citycon Treasury BV is the dutch financial arm of Finnish real estate company Citycon Oyj, which acted as guarantor on this transaction. The company has approximately €4.4 billion in assets, including 40 shopping centres across Finland and Estonia (12), Norway (17), and in Sweden and Denmark (11). Citycon had around €1.7 billion equivalent of outstanding senior debt prior to this issue. Danske Bank, Nordea, SEB and Swedbank as Joint Bookrunners.

    The net proceeds of the green bond will be used to finance and re-finance Eligible Green Assets and Projects in accordance with Citycon’s established Green Finance Framework (GFF) including refinancing of existing NOK debt. A Second Party Opinion (SPO) on the GFF has been issued by Cicero Shades of Green with a Medium Green Shading and a governance score of Good

    Image © SpareBank 1 SMN 

    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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