Stockholm (NordSIP) – Following last week’s inaugural green bond issuance by the Danish sovereign, green bond issuance in Danish Krona is booming. The sovereign launch created a DKK green benchmark against which other sovereigns, supranationals and agencies (SSAs) can more comfortably price their own securities. Two giants of the European SSA market – the Nordic Investment Bank (NIB) and KfW – have followed in the footsteps of the Danish government over the intervening week.
Pensions and AMs Join NIB
First came the NIB which on Thursday, January 20th, issued its own inaugural DKK2 billion NIB Environmental bond. The bond pays a 0.125% coupon and has an eight-year maturity. Danske Bank and SEB acted as joint lead managers for this transaction.
The transaction was met with good demand from predominantly Danish domestic Pension (48%) and Fund Manager (52%) investors, allowing the bond to be priced at a 99.651 discount to yield 0.168%, equivalent to 18.2 basis points (bps) over the underlying Danish Government bond (DGB).
“NIB is pleased to have issued our inaugural NIB Environmental Bond denominated in DKK, shortly after the very successful inaugural green bond from the Kingdom of Denmark. NIB’s transaction enjoyed strong support from domestic investors, which is a proof of the continuously growing interest in sustainable investments in Denmark,” says Jens Hellerup, Head of Funding and Investor Relations at NIB.
“Investing into sustainability labelled bonds support our ambition to create attractive returns, create value for customers and contribute to the sustainability transition,” adds Erik Eliasson, Head of Responsible Investments, Danske Bank Asset Management.
“Following the success of the inaugural Green Government Bond issue from the Kingdom of Denmark, we saw a surge in demand for DKK denominated Green assets from the domestic investor base. The Nordic Investment bank was the perfect name to answer to that call considering its top credit quality, locally anchored green bond framework and strong name recognition among Danish institutional investors. Congratulations to the entire team at NIB to this very successful entry into the DKK Green Bond market. As a Danish bank, Danske Bank is very proud to have supported NIB in this important transaction,” explains Gustav Landström, Global Head of SSA Origination at Danske Bank.
“This 2bn inaugural Danish kroner Green Bond from NIB is a great statement allowing NIB to raise sustainable funding in one of its core member countries. The deal emphasises NIB’s ability to act swiftly and to provide high quality Green Bonds to the growing Danish Green Bond investor community,” adds Lars Eibeholm, Head of Sustainable Banking, Denmark, at SEB.
KfW Makes a Splash
Later, at the beginning of this week, on Monday, January 24th, KfW (formerly “Kreditanstalt für Wiederaufbau” or the “Credit Institute for Reconstruction”) issued an inaugural DKK1 billion zero-coupon Green Bond maturing in November 2024.
This was KfW’s first-ever Danish Krone (DKK) denominated Green Bond, its first DKK-denominated bond in 26 years. Danske Bank acted as the sole lead manager on this transaction.
According to market sources demand was dominated by ESG-focussed domestic and international investors and was later priced at a 101.192 premium, equivalent to 56bps below mid-swaps, to provide a re-offer yield of -0.424% and a tight spread versus the 0% DGB November 2024 of +6.9bps.
The transaction was issued under the KfW “Renewable Energies – Standard”, “Energy-efficient Construction” and “Clean Transportation” programmes.
