Stockholm (NordSIP) – Forestry is one of the most significant segments of the Nordic green bond market, accounting for almost half of all the green forestry bonds outstanding at the start of 2021. The financial importance of green bonds echoes the real economies of Sweden and Finland where the forestry sector accounts for a non-negligible share of labour force and GDP.
Finland’s UPM-Kymmene Corporation, one of the biggest players in the Nordic forestry sector, issued its second green bond at the start of last week. The transaction consisted of a new ten-year €500 million green bond launched under its Euro Medium Term Note (EMTN) programme and UPM’s Green Finance Framework. This transaction, follows the launch of UPM-Kymmene’s first green transaction in November 2020, a €750 million eight-year bond.
The new green bond pays a fixed coupon of 0.50% and was priced at 60 basis points (bps) over mid-swaps, 15bps below initial price thoughts, to yield 0.609%. The funds will be used is sustainable forest management, climate positive products and solutions and pollution prevention and control, including waste management.
“We have successfully issued our second green bond and are again delighted for the confidence shown by the investors. This new green bond issue is further supporting us in achieving our responsibility targets as defined in our Biofore strategy,” says UPM´s CFO Tapio Korpeinen.
Strong demand from international investors pushed orderbooks to €1 billion, twice the final issuance amount. Investor interest helped bring pricing Regionally, German investors were dominant, purchasing 28% of the green bonds. Nordic investors followed with 24% of the securities, ahead of French (15%), Southern EU (12%), UK and Ireland (9%), Benelux (8%) and other undisclosed investors (3%). Sectorally, Asset managers were dominant representing 65% of the total investment, followed by official institutions (20%), insurance companies and pension funds (8%), banks and private banks (5%) and other undisclosed institutions (2%). Citigroup, BNP Paribas, Danske Bank and Nordea acted as Joint Bookrunners for the transaction and UPM has applied for the bond to be listed on Euronext Dublin.
UPM-Kymmene’s six business areas are UPM Biorefining, UPM Communication Papers, UPM Energy, UPM Raflatac, UPM Specialty Papers and UPM Plywood. In 2020, the company’ sales stood at €8.6 billion. It has 51 production plants in 12 countries, 18,000 employees in 46 countries and 13,400 customers in 130 countries. Going forward, the company’s focus is on is looking for new business opportunities to replace fossil-based materials with renewable and recyclable alternatives.