KBN Joins Euro Green Market

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    Stockholm (NordSIP) – On April 18th, Kommunalbanken Norway (KBN) issued a €500 million 5-year green bond. It was KBN’s first green bond in euros and the inaugural transaction under the updated Green Bond Framework. KBN also described this issuance as its largest and most oversubscribed Euro benchmark to date, with orderbooks more than five times larger than allotment.

    KBN is a Norwegian public agency 100% owned by the Norwegian Central Bank. It is in charge of providing low-cost finance to Norwegian local governments.

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    The Transaction

    The bond pays a 2.875% coupon and was priced at a 99.583 discount, 11 basis points (bps) over mid-swaps (3bps inside guidance), to provide a reoffer yield of 2.966%, equivalent to a spread of 48bps over the underlying Geman government bond.

    Demand from a wide range of investors allowed orderbooks to swell above €2.7 billion. Sectorally, central banks and official institutions purchased 58% of the green bonds, followed by asset managers /23%), banks (14%) and insurance companies (5%). Geographically, demand was dominated by investors domiciled in Germany, Austria and Switzerland (24%) and the Benelux (24%). Next came investors from the Middle East and Africa (MEA) (13%) and other miscellaneous regions (11%). Nordic investors purchased another 11% of the securities, followed by investors from Southern Europe (9%), the UK and Ireland (8%). Citi, HSBC and Natixis acted as Joint Lead Managers, while SBC was the sole gree structuring agent.

    Emmanuel Smiecench, Co-Head Public Sector Origination & Syndication at Natixis, congratulated KBN. “The reception by investors was overwhelming and reflects not only the signature and interest in the new updated Green framework, but the strategy undertaken by the funding team. In selecting this window, KBN took advantage of optimal conditions to target an impressive final spread that cements an attractive new point on the curve. Results from today will only further encourage future transactions and we look forward to watching the continued success of KBN.”

    KBN’s Green Bond Framework

    KBN’s Green Bond Framework was updated in this month (April 2024) places greater emphasis on both nature- and climate-related risks, including a close examination of land use of all green lending to new building projects. The eligible ICMA green project categories included are Green Buildings and Energy Efficiency, Renewable Energy, Clean Transportation, Green Buildings, Pollution Prevention and Control, Sustainable Water and Wastewater Management, Environmentally Sustainable Management of Living Natural Resources and Land Use and Climate Change Adaptation.

    S&P Global rated the Framework “Medium Green“ highlighting KBN’s selection process and documentation requirements for green lending and its commitment to getting an external assessment on impact reporting in future.

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.
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