Stockholm (NordSIP) – On Thursday, March 4th, Citycon Oyj issued a €350 million 7-year green bond, its inaugural foray into the Euro green bond market. The bond pays a 1.625% coupon and was priced at 200 basis points (bps) over mid-swaps, down from initial price thoughts (IPT) of MS+240bps, providing a 1.1794% average yield for primary market investors.
Citycon is an owner, manager and developer of urban community hubs in the Nordic region, managing a portfolio of approximately €4.4 billion across 40 assets in Finland, Norway, Estonia and Sweden, such as Kista Gallerian (Pictured) in the suburbs of Stockholm.
Green Bond Framework
This transaction’s proceeds will finance and re-finance Eligible Green Assets and Projects, consistent with Citycon’s established Green Finance Framework (GFF). Citycon’s green financing framework focuses on the energy transition to a sustainable and low carbon economy by developing green assets. It includes such projects as green buildings, energy efficiency, renewable energy or waste management.
“The demand for the bond was extremely strong with an order book close to five times over-subscribed, and we therefore decided to enlarge the size of the issue to 350 million from the original issue size of 300 million euros,” says CFO and Executive Vice President Eero Sihvonen. “We are delighted to see that the spreads have returned to pre-covid levels, which allowed Citycon to issue the bond with a very attractive coupon of 1.625%. The new issue premium is one of the lowest for any corporate Eurobond in 2021 and the coupon is the second lowest in the company’s history.”
“This once again highlights the quality of our credit and our access to the capital market. As a result of this successful issuance, our debt maturity profile is significantly improved, refinancing risk is further reduced and net liquidity improved as we aim to use the net proceeds to partially pay back the bond maturing 2022 and pay down other short-term debt,” Sihvonen adds.
According to the transaction summary, the transaction benefitted from a stabilization in the rates market, leveraging off by the holders of the 2022 bond looking to roll over into the new issue, and clearly the appeal of the ESG thematic.
Strong interest from 85 unique investors pushed final order books to €1.1 billion. Sectorally, asset managers dominated demand, purchasing 75% of the green bonds. They were followed by central banks and official institutions (9%), pension funds and insurance companies (6%), banks and private banks (5%) and other miscellaneous investors (5%). Geographically, international investors were dominant, with Nordic investors representing less than a quarter (23%) of investors. Investors domiciled in the UK and Ireland purchased (31%) of the bonds, followed by French (20%), German (13%), Benelux (10%) and other undisclosed jurisdictions (3%).
Danske Bank, Deutsche Bank, Nordea Bank and OP Corporate Bank acted as Active Joint Bookrunners, and SEB and Swedbank acted as Passive Joint Bookrunners.
Image Courtesy of Citycon Oyj