Stockholm (NordSIP) – On 27 April, the Council of Europe Deveopment Bank (CEB) issued a SEK650 million five-year Social Inclusion Bond (SIB), the largest social bond in the Swedish market at this stage and the first such social bond from an SSA issuer, a sign of the growing role of social sustainability in the Swedish capital markets. The bond is listed on the Nasdaq Sustainable Bond Market exchange and CEB’s Deputy CFO Arturo Seco Presencio (Pictured, the right) and Head of Long Term Funding Operations Felix Grote (Pictured, on the left) rang the opening bell of the exchange on May 16th.
A Leader in Social Bonds
The CEB was set up in 1956, as an instrument of the policy of solidarity in Europe to help refinance the reconstruction of the continent after the devastation of World War II and subsequently played a crucial role in assisting Eastern block countries in their transition from communism in the 1990s. The organisation has 42 member states.
According to the CEB, Swedish Krona is the third SIB currency after issuance in EUR since 2017 and USD since 2020. According to the SIB framework, proceeds can finance projects in one or several sectors of action: social housing for low-income persons, education and vocational training, health and social care, and support to MSMEs for the creation and preservation of jobs. The framework was reviewed by Sustainalytics, which considered its use of proceeds to be expected to expected to help advance SDGs 3, 4, 8 and 11. According to Sustainalytics, CEB’s project evaluation and selection processes were considered “to be strong and to be aligned with market best practice”, “the management of proceeds as aligned with market practice” and its “allocation and impact reporting as aligned with market practice”.
As the only multilateral development bank with an exclusively social mandate, the CEB has been a leader in this market ever since the issuance of its first SIB in April 2017. Its annual social bond issuance has been steadily expanding and represented a record 34% of its 2022 funding programme.
“The new Swedish Krona issue is proof of the leading role of the CEB’s Social Inclusion Bonds in international financial markets, and builds on other achievements such as the issuance of the first Ukrainian-refugee bond. Our SIBs are both a precious instrument for the CEB to deliver on its mission of strengthening social cohesion in Europe and a significant testimony that it is well-placed to do it,” commented CEB Governor Carlo Monticelli.
Tapping Swedish Investors
The five-year bond was a private placement and the bookrunner was Swedbank. It pays a 3.16% coupon and was priced at 15 basis points over mid-swaps, on the back of strong investor demand from Swedish investors, namely savings banks (23%) and insurance companies (77%), such as Länsförsäkringar.
“Through this investment in Council of Europe Development Bank’s first SEK denominated social bond we get the opportunity to contribute to Europe’s social sustainability agenda. A contribution that is deemed extra essential in these turbulent times. We value in particular the bond’s intended use of proceeds to ensure access to quality healthcare and education. CEB’s social impact reports are also of great value in the investment process, e.g. number of people benefited from types of financed projects. That level of transparency enables monitoring against one of the SDGs we have prioritized, namely 3 “Good Health and Well-being”, as well as reporting under EU’s Sustainable Finance Disclosure Regulation (SFDR). In essence, this issuance mirrors our ambitions linked to sustainable value creation, combining financial returns and sustainable development impacts,” said Kristofer Dreiman, Head of Sustainability at Länsförsäkringar.
“Nasdaq are very happy to welcome the Council of Europe Development Bank (CEB) to the Swedish market and to our Sustainable Bond Market. The social bond market has been sparsely tapped by Swedish issuers and we hope that CEB’s leadership will help spur the development going forward. The transaction highlights the demand for investments in a broader spectrum of sustainable assets than the environmentally themed green bonds,” Ann-Charlotte Eliasson, Head of European Debt Listings at Nasdaq, concluded.
