Stockholm (NordSIP) – Following last week’s issuance from Vattenfall, the hybrid green bond market turned to Finnish real estate. On Thursday, May 27th, Citycon launched a €350 million green hybrid bond. The Capital Securities – as the hybrid bonds are known – pay a 3.625% fixed rate coupon until the first reset date on 10 September 2026, down from initial price thoughts of 4.375%, after books grew to €800 million.
Thereafter, the interest rate will reset on each fifth anniversary. The Capital Securities do not have a specified maturity date but Citycon is entitled to redeem the Capital Securities on any date in three months up to and including the “First Reset Date”, and subsequently, on each annual interest payment date. The issue date is on 4 June 2021.
The Capital Securities are subordinated to certain other debt obligations and are treated as equity in Citycon’s consolidated financial statements prepared in accordance with IFRS, although Capital Securities’ holders have no shareholder rights.
“We are pleased with the successful issuance. The demand for the Capital Securities was very strong with an order book reaching around one billion euros and approximately 150 investors, and therefore we were able to tighten the pricing and increase the size of the issue to EUR 350 million during the book-building process,” CFO and Executive Vice President Eero Sihvonen. “The Capital Securities will be issued under Citycon’s Green Financing Framework, which integrates Citycon’s sustainability targets with our financing activities and further highlights Citycon’s profile as a forerunner in sustainability. In addition to strengthening our balance sheet, the issuance brings flexibility to execute on our transformation strategy and enables the diversification of our portfolio both organically and through potential acquisitions.”
Geographically, investors domiciled in the UK and Ireland were dominant (32%), followed by domestic Nordic investors (23%), investors from the Middle East (11%), France (11%), Germany and Austria (9%), Southern Europe (6%), Switzerland (3%), the Benelux (2%) and other miscellaneous locations (3%). Secotrally, Asset managers purchased 63% of the notes, followed by pension and insurance companies’ 18%, banks and private banks’ 131% and other miscellaneous investors’ 7%. Citigroup Global Markets Limited, Danske Bank A/S, Deutsche Bank Aktiengesellschaft, Goldman Sachs International, Nordea Bank Abp and Swedbank AB (publ) acted as joint bookrunners.
Proceeds from the issuance of these securities will be allocated to the financing and refinancing of new and existing assets, developments or projects that meet Citycon’s green financing framework requirements in categories green buildings, energy efficiency, renewable energy or waste management.
Image courtesy of Citycon