Stockholm (NordSIP) – Despite an adverse market which has seen some green bond market indices lose as much as 16% of their value since the beginning of the year, Nordic investors continue to express an appetite in sustainable fixed income.
On May 6th, 2022, Stockholm Exergi issued a SEK1.5 billion triple-tranche green bond. The first tranche was a 4-year fixed-rate note worth SEK400 million that pays an annual coupon of 3.093%, and was priced at 65 basis points (bps) over mid-swaps, 10bps below initial price guidance (IPG). Another SEK350 million was issued in 7-year fixed-rate green bonds that pay an annual 3.683% coupon. Last, but not least, SEK750 million were issued in similarly dated 7-year via floating-rate notes that pay 115bps over the 3 months STIBOR, about 5 to 10 bps below its original 120/125bps IPG.
Strong Investor Interest
Market interest was strong for this transaction, with over 30 investors pushing combined order books to close to SEK4 billion. Demand was dominated by Swedish investors, who purchased 89% and 53% of the 4-year fixed-rate note and of the 7-year floating-rate note, respectively. The remaining 11% of the shorter-term securities were purchased by Danish (8%) and other undisclosed (3%) investors. Norwegians (38%), German (5%) and Finnish (4%) investors purchased the remaining the 7-year floating-rate note.
Sectorally, asset managers were the main investors in the 4-year green bonds, purchasing 69% of the tickets, leaving the rest to pension and insurance companies (20%) and other undisclosed investors (11%). 68% of the floating rate notes were purchased by pension and insurance companies, followed by asset managers (24%) and other undisclosed investors (8%).
“Our secure operations, our stable financial results and our initiatives to make Stockholm even more sustainable continue to attract many investors. Our unique opportunities to be able to create large-scale negative emissions are of particular interest. I am glad that we were able to issue a total of over one billion kronor in 7-year tranches in a volatile market,” says Heiko Bechtel, Stockholm Exergi’s CFO.
Green Credentials
Stockholm Exergi is a Swedish district heat, power and cooling producer and supplier. The company is owned by the City of Stockholm and Ankihale, a consortium of long/term
European intuitional investors comprising APG, Alecta, PGGM, Keva and AXA. Stockholm Exergi operates in the greater Stockholm area, with annual heat deliveries of around 8TWh – over 17% of total Swedish district heat demand. This electricity is 99% produced with renewable or recovered fuel sources. The company targets to be climate positive in 2025.
Stockholm Exergi issued its inaugural green bond in 2015, then under its previous name AB Fortum Värme. Since its first green bond issuance, the company has come to the market five times to issue a cumulative SEK9.2 billion. Stockholm Exergi’s Green Bond Framework enjoys a Dark Green rating from CICERO Shades of Green, the second opinion provider’s highest sustainability rating.
“We are proud to continue our collaboration with Stockholm Exergi on this journey, following the structuring of their Green Bond framework in 2019. As always, there was a tremendous amount of investor interest when Stockholm Exergi issued Green Bonds. Exergi’s green projects and solutions correspond to the long-term vision of a low carbon and climate-resilient future and their Bio-Energy Carbon Capture and Storage (BECCS) is truly something special,” says Lars Mac Key, Head of DCM Sustainable Bonds at Danske Bank.
