KPA Pension Invests in Swedish Municipal Green Bond

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Stockholm (NordSIP) –  On May 18th, the Swedish Municipality of Linköping issued a SEK500 million five-year green bond. The funds will go to fund a new municipal swimming pool which must achieve a Miljöbyggnad Silver rating. This is the second highest rating, according to the Swedish system for environmental certification of buildings set up by the Sweden Green Building Council (SGBC), Sweden’s largest organization for sustainable community building.

Camilla Larsson, CEO of KPA Pension

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“Investing in the municipalities’ operations allows our customers to receive a secure and sustainable pension, at the same time as they see their money already being used today,” says Camilla Larsson (Pictured), CEO of KPA Pension.

The bond pays a 0.395% coupon and was priced at par, 1 basis point below mid-swaps, to yield. The sole bookrunner on this transaction was SEB and KPA Pension was the sole investor in this private placement transaction. KPA Pension manages the occupational pensions of Sweden’s municipal and regional civil servants.

“Linköping is very pleased with the transaction and with KPA as an investor. The proceeds will be used for the construction of a public indoor swimming pool,” says Hans Asplund, Head of Treasury.

This transaction is motivated by KPA Pension’s “good pension wheel” (“det goda pensionshjulet”) investment approach where employees’ occupational pensions are invested in municipal activities.

“Linköping, just like KPA Pension, has high ambitions for sustainability and aims to achieve achieve CO2 emissions neutrality by 2025. We are satisfied to be able to contribute to their transition while our customers get a good return on their pension savings,” Larsson adds.

Featured Image by Rupert Kittinger-Sereinig 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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