Funding in early 2015: Global appeal

Jens Hellerup, Head of Funding and Investor Relations at NIB

During the first quarter of the year, NIB carried out eight funding transactions and raised EUR 2.1 billion (annual target: EUR 3.5 billion). The popularity of NIB’s annual USD benchmark shows that NIB’s name has global appeal.

The USD benchmark is NIB’s largest deal of the year. It secures a substantial share of the annual funding volume.

“Correctly interpreting investors’ needs and spotting the right timing are crucial for success”, says Jens Hellerup, Head of Investor Relations and Funding.

“In mid-March, NIB saw an opportunity for a three-year transaction, a maturity which hadn’t seen a lot of issuance yet this year.”

The transaction proved to be a good fit for the market. The order book grew to USD 1.85 billion, and subsequently the final deal size was set at USD 1.25 billion—a notch higher than planned. The bond was priced at mid-swaps minus nine basis points (or +13.25 basis points over the March 2018 Treasury bond), which is the tightest level the Bank has issued a USD benchmark since 2008.

Over half of the orders came from central banks—investors very loyal to NIB’s name.

“It was encouraging to see a good mix of new and existing investors supporting the deal. The geographical distribution and investor diversification was excellent and shows that NIB has a really global appeal”, says Mr Hellerup.

Read the press release for more information.

Issuance in the New Zealand dollar, the Kauri market, is a regular exercise in NIB’s funding programme. Over the years, NIB has become the second biggest borrower in this market. In spring 2015, the Bank was able to collect the Issuer of the Year award from the finance market publication Kanganews for the second year in a row.

With this in mind, it was not surprising that the funding programme started in the first full business week of 2015 with a tap of NZD 550 million to an outstanding line with a maturity in 2020.

“It was good to upsize this line. It became more liquid and is, therefore, more attractive to investors”, Mr Hellerup explains.

In mid-April, NIB priced a new five-year NIB Environmental Bond (NEB). The deal totalled SEK 1 billion. This was NIB’s third and largest Swedish krona-denominated green bond to date.

The issue attracted investors from the Nordic countries, Germany and North America, as well as some other regions. The overall majority were “ESG” investors—those integrating environmental, social and governance considerations into their investment processes.

One of them, the Swedish corporate investor Storebrand, offered the following comment on the deal:

“We see the Nordic Investment Bank as an excellent facility to bridge investments in environmentally friendly projects, and making it possible to finance them through bonds.”

Read the press release for more information about the transaction.

“This was NIB’s third green bond issued in SEK over the last two years, which shows how well developed the Nordic ESG investor base has become”, Mr Hellerup says.

NIB has had a good start to the year. What can we expect further on?

“Besides smaller, tailor-made transactions for single investors, NIB will try to capture opportunities in public format in the Kangaroo and Kauri markets. Further, a follow-up to last year’s Environmental Bond benchmark might be another project worthwhile pursuing. We are looking forward to a busy year.”