Stockholm (NordSIP) – On February 17th, Electrolux, a leading global appliance company, launched its second green bond. The transaction was worth SEK2 billion in five-year bonds and was divided into fixed- and floating rate (FRN) notes.
SEK750 million was issued in five-year fixed-rate notes that pay a 1.705% annual coupon. These bonds were priced at 60 basis points (bps) over mid-swaps (MS), at the lower range of the MS+60-65bps guidance provided at the start of the transaction. SEK1.25 billion was issued in five-year FRNs that pay an annual coupon of 60bps over the three-month STIBOR (3mS), also at the lower range of the 3mS+60-65bps guidance provided at the start of the transaction.
Demand mainly for the FRN, from asset managers and domestic Swedish investors, swelled order books to SEK3.1 billion. Swedish investors purchased 95% of the securities, leaving another 2% for Danish investors, 2% for Italian investors and 1% for other undisclosed investors. Sectorally, asset managers represented 62% of the investors, followed by pension funds and insurance companies (25%) and other miscellaneous investors (13%). Danske Bank and SEB acted as Joint lead Managers on this transaction.
Electrolux is rated A- (Stable) by S&P. The company had sales of SEK 126 billion and employed 52,000 people around the world in 2021. Electrolux offers various appliances, such as refrigerators, freezers, cookers, dryers, washing machines, dishwashers, room air conditioners, microwave ovens, vacuum cleaners and other small domestic appliances, as well as consumables and accessories.
According to Electrolux’s Green Bond Framework, published in 2019, “Eligible Green Assets can only involve fossil-fuel-based energy generation equipment if: (i) the equipment is a bridging solution towards climate-neutral production processes or (ii) if the fossil fuel component of the energy required to run the equipment is marginal (<5%) compared to the production unit’s total energy consumption.” Second opinion provider CICERO Shades of Green, rated Electrolux’s Green Bond Framework as “Medium Green” and assessed the Framework’s governance as “Excellent”.
Among other pitfalls, CICERO noted that the Framework “does not exclude financing or refinancing of fossil fuel-related infrastructure, such as enamelling furnaces”, and that “investments in some categories may include construction of facilities and other supporting infrastructure. Construction materials like cement and equipment for construction are likely to be fossil fuel-intensive.”
