2023 Funding outlook

So far in 2023, the biggest public transactions for NIB have been a 3-year GBP 600 million bond, and a 7-year EUR 500 million NIB Environmental Bond, the first one this year. These bonds kick off what we expect to be a busy first half of the year. The issuances follow a successful 2022, which turned out to be a record year for us in several ways.

Our funding plan for 2023 is in the EUR 7.5-8.5 billion range. We estimate that around 70% of the plan needs to be issued before summer vacations start, due to internal liquidity requirements. Year-to-date, the Bank has raised approximately EUR 1.6 billion in new funding.

In line with previous years, we expect to issue two global USD benchmark bonds during 2023. NIB’s record year of green bond issuance in 2022 shows that there is still demand for sustainable bonds. The Bank aims to satisfy that demand by issuing an equal, or bigger, amount of NIB Environmental Bonds (NEBs) this year. The first NEB was priced on 19 January, and the 7-year “no grow” EUR 500 million bond had a solid book of almost EUR 1 billion.

“The rarity of the NIB name in euro benchmark bonds and the NIB Environmental Bond format clearly contributed to the success of this transaction” says Jens Hellerup, NIB’s Head of Funding and Investor Relations.

NIB has now issued a total amount of EUR 7.3 billion under its NEB framework. The Bank continues its engagement and commitment to sustainability issues. Please read more about this in our Impact Report, which we will publish on 28 February 2023.

We continue to highlight the importance of diversification. Hence, we will complement the issuance with private placements and other public transactions, just like we did with the GBP 600 million benchmark bond issued in the second week of this year. The orderbook was amongst the largest for NIB’s transactions denominated in British Pound.

“There is a fair amount of UK based investors that only buy our GBP issues, so this is also an important transaction in terms of diversifying our investor base,” Jens Hellerup says.

Updated EMTN programme

In order to better serve investor needs, NIB updated its Euro Medium Term Note (EMTN) programme at the end of December 2022. Key amendments include the inclusion of 144A mechanics to allow for selling and offering bonds under the programme in the Unites States to qualified institutional buyers, the inclusion of risk-free rate language aligned with market standard language, and the inclusion of up-to-date risk factors.

2022 a record year

Due to the high demand for NIB’s loans and higher than expected collateral outflows, the Bank upsized its funding plan with more than EUR 2 billion during 2022. At the year-end, NIB had raised EUR 9.59 billion in new debt issuance, which is the biggest funding programme for the Bank during any year.

Despite the volatility and an economic turndown, NIB managed to successfully bring two global USD 1.25bn benchmark bonds to the market, along with two benchmark bonds in GBP and a EUR 500 million NEB. In addition to the euro denominated NEB, the Bank issued environmental bonds in all the Scandinavian currencies, including an inaugural NEB denominated in Danish Kroner. NIB’s total Environmental Bond issuance in 2022 surpassed EUR 1 billion and marked a record year of NIB’s green issuance during a year.

The year of 2022 showed the importance of having access to different markets in stressed circumstances. NIB complemented the above mentioned issuances with other public and private transactions, thus maintaining a global investor base and a diversified portfolio of currencies. In total the Bank issued 111 transactions in twelve currencies.

After a prolonged period of limited travelling and fewer physical meetings, NIB’s Funding team welcomed the loosening of restrictions in 2022. Especially during the latter part of the year, we were on the road again, taking part in conferences and meeting banks and investors.