Stockholm (NordSIP) – Lantmännen issued an inaugural SEK1 billion green bond maturing in 2026. The deal follows the announcement on April 14 that the company had updated its MTN programme to authorise the issuance of green bonds.
Lantmännen is an agricultural cooperative and Northern Europe’s leader in agriculture, machinery, bioenergy and food products, with operations in more than 20 countries worldwide. Lantmännen is owned by approx. 19,000 farmers and employer of approx. 10,000 people, structured as a grain-focused marketing and supply cooperative, active in all parts of the value chain, from field to fork.
In 2020, the company had an annual turnover of SEK45 billion. Lantmännen’s business is divided into three segments and two business areas, namely Agricultural (44% of net sales), Energy (8%), Food (31%), Swecon Business Area (16%) and Real Estate Business Area (1%). The inaugural green bond proceeds will be used in accordance with the new Green Bond Framework that.
Lantmännen’s aim is to mobilise debt capital to promote the transition towards a low-carbon and environmentally sustainable society. The use of proceeds of any green bond issued under the MTN programme will be allocated in accordance with Lantmännen’s newly established Green Bond Framework, which Danske Bank helped Lantmännen develop. The framework allows for financing or refinancing of eligible projects in six total categories, of which the two most significant are renewable energy and manufacturing of eco-efficient and circular economy adapted products, technologies and processes.
The Inaugural Green Bond
The dual-tranche deal is divided into two parts. A fixed rate note pays a 1.115% annual coupon and was priced at par, 78 basis points (bps) over mid-swaps. The second tranche is a floating rate note that was also priced at par and pays 78bps over the 3-month STIBOR. Demand was strong and combined order books closed at SEK3.3 billion allowing both tranches to be priced 7bps below the lower band of initial price thoughts. Danske Bank and SEB acted as joint managers on this transaction.
The transaction attracted overwhelming demand from Swedish investors, who represented 92% and 72% of investors in the fixed and floating rate note, respectively. Finnish investors and French investors purchased the remaining 7% and 1% of the fixed rate securities, respectively. Investors from Norway (24%), Finland (1%), Denmark (1%) and other undisclosed locations (2%) made up the rest of the demand for the floating rate note. Sectorally, asset and fund managers represented 95% and 74% of the demand for the fixed and for the floating rate note. Pension funds purchased another 5% of the fixed rate note as well as 19% of the floating rate note. Banks (4%) and corporate treasuries () made up the rest of the demand for the floating rate note.
“Lantmännen has since long integrated sustainability into its operations and has a clear vision of the future. This was clear in the process of developing the green bond framework. Lantmännen’s green bond framework was very well received by investors and the book for the green bonds quickly rose to SEK3.3 billion,” says Lars Mac Key, Head of DCM Sustainable Bonds at Danske Bank.
“Sustainability is deeply rooted in Lantmännen’s DNA, and we have the ambition to integrate a green perspective into everything we do. We have reduced our climate impact since 2009, and have set up ambitious goals for sustainability efforts in the years to come – both for our own production and for Swedish agriculture. With our new green framework and the green bond, we can mobilize the capital we need to drive this agenda. Our strong sustainability profile and the green bond gives us the market’s very best conditions,” says Christian Johansson, CFO at Lantmännen.
“It’s fitting for Öhman Fonder to invest in Lantmännen’s sustainable farming initiatives, particularly when we consider that the agriculture sector represents one-fifth of greenhouse gas emissions globally. Lantmännen conducts its business responsibly throughout the value chain and has high ambitions to reduce its environmental footprint”, says Kristofer Klondaris, Portfolio Manager, Öhman Fonder.
“Lantmännen has a unique position with its vertically integrated value chain. They lead the development in sustainable agriculture, which creates a safe and solid food supply while reducing their climate footprint. This is a development our fixed income funds want to be a part of and contribute to,” adds Erik Gunnarsson, senior portfolio manager Handelsbanken Fonder.
Image courtesy of Lantmännen