Stockholm (NordSIP) – On May 20th, VR Group Plc, the national transport operator in Finland, providing long-distance and commuter rail services as well as rail freight, buses and trams, issued a seven-year €300 million inaugural green bond.
The bond pays a 2.375% coupon and was priced at 90 basis points (bps) over mid-swaps, 20bps below initial price thoughts, to yield 2.416%. This transaction, which attracted strong demand, with order books peaking at €650 million. Danske Bank A/S acted as the Global Coordinator, and Danske Bank A/S, Nordea Bank Abp, OP Corporate Bank plc and SEB AB (publ) as joint lead managers for the transaction.
“We are very pleased with the success of VR Group’s first green bond. The bond offering was well oversubscribed which highlights both the strength of our credit profile and as well as the investors’ trust in our ability to promote sustainable transportation and logistics in the Nordics. We will invest for example in new electric locomotives, electric trains and in the maintenance and life-cycle management of the existing fleet” says Erkka Repo, CFO at VR Group.
Geographically, Nordic investors were the most interested in VR Group’s green bonds, purchasing 56% of the securities, followed by Germany (24%), France (6%), the UK (2%) and investors in other undisclosed jurisdictions (12%). Sectorally, fund managers were dominant (52%), followed by insurance and pension companies (28%), official institutions (9%) and other undisclosed investor categories (11%).
VR Group’s Green Finance Framework was reviewed by CICERO Shades of Green which rated it Dark Green, its highest level. The framework’s governance was also praised as “Excellent” by the Second Party Opinion provider. According to the Finnish company, eligible assets and projects under the Green Finance Framework include investments in clean transportation, renewable energy projects and energy efficiency for buildings owned or operated by VR Group.
“We believe that VR Group has an important role to play in the critical green transition that is now being accelerated all over the Nordics. By significantly increasing the popularity of climate-friendly public and rail transport, we aim to lead the transition in transportation and logistics. For this purpose, we have initiated an extensive investment program. The Green Finance Framework will enable us to offer also investors the opportunity to finance VR Group’s investments in sustainable traffic,” says Acting President and CEO Topi Simola, VR Group.
Asides from these environmental credentials, the transaction benefitted from the stability of the underlying business, 100% ownership by the Finnish government and the issuer’s strong A+ credit rating, according to S&P.