Swedish Sub-nationals Gear Up

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    Stockholm (NordSIP) – Following last week’s DKK SSA rush, the attention of Nordic sustainable fixed income markets has turned to Swedish subnational borrowers. On January 25th, the Swedish Municipality of Helsingborg established a sustainability-linked bond framework while the Region of Stockholm announced the adoption of a new green bond framework on January 27th.

    Helsingborg Unveils Sustainability-Linked Framework

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    By establishing a framework for sustainability-linked bonds, the City of Helsingborg creates a new form of debt instrument, the returns from which are linked to emission reductions targets within the geographical area of Helsingborg.

    The city has a target of net-zero greenhouse gas emissions by 2035. The framework describes how much the emissions (in tons of CO2e) should be reduced yearly until 2035 in the geographical area of Helsingborg, based on the goals described in the City of Helsingborg’s climate and energy plan. If the emission reductions do not correspond to the target, the bond’s coupon can be increased or an additional payment can be made once the bond has reached maturity. Data from the national emissions database are used to track emissions.

    “Issuing sustainable bonds to fund our work towards net zero greenhouse gas emissions and a sustainable society, is an important step for us. We welcome all investors who will join in the transformation towards sustainability,” says Marcus Nilsson, CFO in the city of Helsingborg.

    The City of Helsingborg has developed the framework in collaboration with Danske Bank and in accordance with the International Capital Market Association’s (ICMA) Sustainability-Linked Bond Principles. S&P Global Ratings has given a Second Party Opinion on the framework. SEB Investment Management has purchased the first SEK500 million bond issued under the new framework, brokered by Danske Bank.

    “To do this together with Helsingborg – the first municipality to create a sustainability-linked bond – is something we at SEB Investment Management are proud of. Municipalities have a key role in Sweden’s climate transition, and by linking financing to a clear emission target that is more ambitious than the national agreements, we can contribute to a faster climate transition,” says Martin Lundvall, Head of Core Fixed Income and Investment grade at SEB Investment Management.

    The sustainability-linked bonds will finance the municipality’s and the municipal companies’ strategy toward increased quality of life, a healthier environment and a sustainable Helsingborg.

    Stockholm Publishes New Green Bond Framework

    Region Stockholm published a new framework for the issuance of green bonds. The framework is part of Region Stockholm’s goal to halve its climate impact by 2030 and reach net-zero emissions by 2045.

    The 2022 Framework includes updates to Region Stockholm’s governance structure for green finance and lays out a commitment to carry out annual post-issue review of the allocation of proceeds, strengthening Region Stockholm’s accountability. The new framework also maps eligible project categories against the environmental objectives under the EU Taxonomy Regulation as well as the UN Sustainable Development Goals (SDGs).

    Danske Bank has provided support with updating the framework. CICERO Shades of Green, graded Region Stockholm’s green framework the highest possible Dark Green and governance score of Excellent. The independent second opinion provider noted that “all the financed taxonomy activities in the project categories are likely aligned with the mitigation criteria in the EU taxonomy, except for existing buildings (acquisition and ownership), where it is currently not possible to conclude on alignment.” Danske

    Green bond proceeds will be used in accordance with the project categories of the framework, Clean and Sustainable Transportation, Green and Energy Efficient Buildings and Renewable Energy. The framework also includes adaptation measures necessary to increase resilience across all sectors in all project categories.

    According to Region Stockholm, the updated eligibility criteria under the framework follow the EU taxonomy; significantly contribute to ‘Climate Mitigation’ and ‘Climate Adaptation’ and acknowledge the related Do No Significant Harm criteria (“DNSH”) and Minimum Social Safeguards as outlined by the EU taxonomy.

    Image courtesy of brightfreak via Pixabay
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