Swedbank Issues First Nordic Bank Social Bond

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    Stockholm (NordSIP) – Although sustainable finance has historically tended to prioritise governance and environmental efforts, the social aspect of ESG is gaining prominence in the aftermath of the inflation that has followed on the heels of the Ukraine war.

    To address this issue, Swedbank announced the issuance of a €500 million 7-year inaugural social bond aimed at employment generation, socioeconomic advancement and empowerment, and affordable housing, on Wednesday, August 30th. The transaction follows the publication of Swedbank Sustainable Funding Framework in 2022 and is the first social bond issued by a bank in the Nordics, according to Swedbank.

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    Transaction Details

    The bond pays a 4.375% annual coupon and attracted strong demand with order books exceeding €855 million. This demand allowed the bond to be priced at a 99.463 discount to yield 4.466%, 135 basis points (bps) over mid-swaps, down 15bps from initial price thoughts (IPTs).

    The security provided a 201.9bps spread over the underlying German government bund at issuance. BNP Paribas (B&D), HSBC, NatWest Markets and Swedbank acted as bookrunners on this transaction.

    This is Swedbank’s fourth ESG bond so far this year. The previous transactions included a €750 milion 5-year green bond issued in January, a £400 million 6-year green bond issued in May and another CHF160 million 5-year green bond in the same month. The social bond’s spread over mid-swaps was consistent with the one achieved in January.

    Social Goals

    Swedbank Sustainable Funding Framework was reviewed by ISS ESG, which provided the Second Party Opinion. The review argued that, despite past issues, the issuer shows “high sustainability performance against the industry peer group on key ESG issues faced by the Commercial Banks & Capital Markets industry. The Issuer ranks 14th out of 300 financial institutions within its industry.”

    “Supporting a positive development in society is a long-standing tradition of Swedbank and I am very proud of this milestone. The bank aims to contribute to the growth and development of the communities in which we operate, and we are committed to continue to do so in the future”, says Fredrik Nilzén, Head of Group Sustainability at Swedbank.

    The bond proceeds are fully allocated to three out of the four social asset categories in the Sustainable Funding Framework: employment generation; Aaffordable housing; Socioeconomic advancement and empowerment; and Access to essential services – education and healthcare.

    According to Swedbank, investments in employment generation target SME financing in socioeconomically weak areas in Estonia, Latvia, and Lithuania. The asset category of socioeconomic advancement and empowerment is to be pursued through financing of female-owned SMEs in Estonia, Latvia, and Lithuania, via financing of a Swedish company that specializes in providing assistive technology and communication solutions for people with disabilities in Sweden and by financing of a housing project advancing the residential life in a socioeconomically weak area in Sweden.

    Last but not least, investments in affordable housing are carried out through financing real estates with rent levels in line with government sponsored tenancy programmes in Sweden. The Framework also includes a social asset category enabling Access to Essential Services through education and healthcare for underserved individuals and communities.

    Image courtesy of Swedbank
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