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    Genova Taps Covered Green Bond

    Stockholm (NordSIP) – The real estate sector is a crucial part of tackling climate change. According to the UN Environment Programme Finance Initiative (UN EPFI), “the buildings sector” contributes to 30% of the annual global greenhouse gas (GHG) emissions and consumes around 40% of the world’s energy. “Following through on the commitments made in Paris means avoiding 77% in total CO2 emissions in the buildings sector by 2050 compared to today’s levels.,”

    To this effect, on 18 August 2021, Swedish real estate company Genova announced it had tapped a senior unsecured covered green bonds in the amount of SEK250 million due 9 September 2024 under the existing SEK750 million framework. The tap was priced at a 101 premium and pays a floating rate coupon of 415 basis points over the 3 months STIBOR, 35bps less than when the series was launched in September 2020.

    Genova Property Group AB (publ) is a modern and personal real estate company that owns, manages and develops properties with a focus on Greater Stockholm and Uppsala. As of June 30, 2020, the company owned properties worth approximately SEK4.7 billion with a lettable area of ​​approximately 168,000 sq.m. and held approximately 5,267 residential building rights. Genova’s preference shares and ordinary shares have been listed on Nasdaq Stockholm since 12 June and 30 June 2020, respectively.

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    Nordea Bank plc was the sole sole and bookrunner in connection with the issue of the Green Additional Bonds. Gernandt & Danielsson Advokatbyrå KB has been the legal advisor in the transaction. Genova intends to apply for listing of the Subsequent Green Bonds on the sustainable bond list of Nasdaq Stockholm. Following this tap, the 2024 series SEK650 million will be outstanding.

    An amount corresponding to the net proceeds from the issue of the Green Additional Bonds together with the SEK 400 million from the initial issue in September 2020 will be used in accordance with Genoa’s green financial framework, which was rated Medium Green by CICERO Shades of Green. The rating agency noted a range of issues, which if addressed would allow the rating to increase.

    “Genova has as a goal that all newly build projects shall be environmentally certified. Currently, energy use and greenhouse gas emissions are not reported and Genova has no energy efficiency targets beyond requirements in the various certification schemes employed. Emissions from construction and material use is not covered. (…) TCFD guidelines are not implemented. (…) The environmental ambition level is not the highest, but represents steps in the right direction,” CICERO ‘s second opinion noted.

    “Based on the overall assessment of the project types in the framework of Genova, governance and transparency considerations, the green finance framework receives an overall CICERO Medium Green shading. In order to achieve a Dark Green shading, the green finance framework would need stronger eligibility criteria in the Green buildings category and stronger governance elements at the company level (strategies, targets, reporting),” CICERO added.

    Most recently, Genova conducted a SEK200 million tap of its perpetual green hybrid bond series at the end of May.

    Image courtesy of Genova

    Filipe Wallin Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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