Despite the prevailing market volatility, NIB is on track with its funding plan for 2016. The Bank expects to raise approximately EUR 5 billion in new funding this year. The Bank plans two or three global benchmark transactions as well as smaller public and private deals in order to maintain a diversified investor base and a good mix of different currencies.
NIB’s first global benchmark of the year was issued on 18 February. The three-year, USD 1.25 billion issue pays a spread of +22 basis points over the reference three-year US Government bond. Despite the recent volatile market backdrop, the Bank was able to reach a final order book of over USD 1.7 billion and a price three basis points lower than where to price talk began.
“We highly appreciate the strong support investors showed NIB once again”, says Jens Hellerup, Head of Funding and Investor Relations at NIB.
The final book consisted of 50 investors, with bank liquidity portfolios accounting for 56%, official institutions for 28%, fund managers for 13% and others for 4%. The geographical distribution was diversified, with EMEA accounting for 50%, the Americas for 31% and Asia-Pacific for 19% (see also the press release).
With an oversubscribed book and a limitation on the size of the transaction, the allocation of amounts to investors can be a challenge.
“It is important that the bond performs after issuance, because this creates investor confidence. The limitation on the size, however, means that we need to scale back on allocated amounts, which makes some investors unhappy”, says Mr Hellerup.
The Bank has been committed to the USD benchmark market since 2002 and has issued benchmark transactions every year since.
“I believe the Bank’s commitment and consistency enables us to maintain broad investor participation”, Mr Hellerup continues.
NIB’s Environmental Bond (NEB) programme is on track as well. At the beginning of the year, the Bank issued a five-year, SEK 1 billion NEB.
Since the environmental bond framework was established in 2011, the Bank has issued nine NEBs for a total of approximately EUR 1.5 billion and identified thirty eligible projects (click here to read more).
“NIB supports awareness of the environmental challenge we are all facing”, says Mr Hellerup.
“The environmental bonds are an excellent tool for communicating this. It helps NIB to attract socially responsible investors who would potentially not be interested in buying NIB’s original bonds.”
Going forward into 2016, NIB will continue with the benchmark programme. The Bank will continue placing issues in the Nordic currencies and in the euro. As in previous years, the Bank is eyeing a bigger, benchmark-sized NEB transaction. Its timing will also depend on the availability of eligible projects. Finally, NIB plans to issue in Australian and New Zealand dollars, since it has been active in these currencies for a long time and liquid benchmark transactions have been established in these markets.
Senior Director, Head of Funding and Investor Relations, NIB
Phone: +358 961 811 401
The Bank's five-year NZD 400 million transaction has become inaugural in the New Zealand bond market this year.
5 Jan 2018
On 13 September, NIB issued its second global USD bond this year. The three-year USD 1 billion deal was priced at mid-swaps -5 bps.
14 Sep 2017
The new SEK-denominated NIB Environmental Bond (NEB) is the sixth and largest NEB transaction issued in Swedish crowns.
23 Aug 2017