Head of Treasury: Demand for NIB bonds unaffected by debt crisis

NIB continues to issue global benchmark bonds as the demand proves to be strong. The Bank’s new funding team has got off to a good start in 2010.

“Our message to the investors is that the Bank, even in today’s volatile market conditions, offers stability and reliability along with the highest possible credit rating,” says Lars Eibeholm, Vice President and Head of Treasury at NIB.

Thanks to its high asset quality, strong balance sheet and ownership, NIB enjoys confidence from global investors who want to diversify into the only Nordic AAA/Aaa rated supranational issuer.

The Bank’s annual funding target is EUR 4.1 billion, which is in line with the funding programme of the last couple of years.

During 2010, NIB plans to launch two to three benchmarks. So far, NIB has completed nearly 70% of the programme and issued two benchmark transactions.

An ample supply of debt from many sovereigns with large funding needs combined with the uncertain economic and political outlook has resulted in volatility on the capital markets and affected the supranational sector.

Mr Eibeholm believes, however, that if the debt crises evolve, the investors’ flight to quality could benefit NIB with its Nordic assets and ownership, and result in relatively lower funding costs for NIB’s customers.

In 2010, NIB’s funding cost has improved compared to the beginning of 2009 and reverted back to more normalised levels. Mr Eibeholm also points out that NIB’s funding needs are significantly lower compared to those of its peers, which also helps NIB’s pricing.

The Bank’s second benchmark of the year, a 5-year USD global transaction launched on 27 May, confirms the strong demand. With a subscription of USD 1 billion within just two hours bookbuilding, the Bank was able to increase the amount to USD 1.25 billion and tighten the price compared to the initial announced price guidance.

“This transaction together with the first benchmark offering in January clearly shows NIB’s ability to raise funds at competitive prices and achieve our funding goals,” says Mr Eibeholm.

NIB’s funding team has got off to a good start in 2010 with its new unit head, Jens Hellerup. He has 10 years of experience working in the Bank’s Treasury Department. Jens’ experience and knowledge, together with the inspiration of the newly hired Chief Funding Manager, Kamal Grossard-Amin, and Funding Manager, Angela Brusas, shall maintain the tradition of NIB’s funding operations.

During the first months of the year, NIB has also launched a 4-year Kauri deal totalling NZD 150 million and a 5-year AUD 600 million deal in addition to a variety of smaller private placements.

In February, NIB issued its first environmental support bond. The transaction raised the equivalent of USD 211 million through a Japanese retail offering. The proceeds will support NIB’s environmental investments. The Bank has an explicit environmental mandate to prioritise and actively seek projects which enhance direct or indirect global environmental benefits.