29 Sep 2015

Inaugural EUR-denominated environmental benchmark

The NIB Environmental Bond programme continues to grow. In September, NIB was back in the EUR market with its first EUR-denominated environmental benchmark.

Ahead of the transaction, NIB’s funding team visited socially responsible investors in the UK, the Netherlands, France and Sweden.

“Investors should be given an opportunity to learn first-hand about NIB’s Environmental Bond Framework. Our team was accompanied by one of NIB’s environmental analysts to present the Bank’s environmental mandate and loan appraisal process”, explains Jens Hellerup, Head of Funding and Investor Relations at NIB.

NIB met with more than twenty investors. The positive response from the investors at the meetings prompted NIB to announce the transaction immediately after the roadshow.

This was NIB’s first EUR benchmark since 2009. About half of the investors in the final order book hadn’t bought NIB before. UK-based investors made up the largest investor group, followed by France and the Netherlands. The issue also provoked strong interest among investors in the Nordics and other European countries.

About 70 per cent of the orders came from SRI investors. As for the investor types, asset managers accounted for 37 per cent of the order book, bank treasuries for 33 per cent, central banks and official institutions for 16 per cent, and pension and insurance companies for another 16 per cent.

Ole-Petter Langeland, Head of Fixed Income at Swedish pension fund AP2, says:

“AP2 appreciates NIB’s work to finance environmentally sustainable projects. It is a high-quality organisation with a good framework for choosing projects and monitoring their progress. Investing in NIB’s new EUR-denominated environmental bond is a natural step for us to diversify our portfolio of ‘green bonds’ with a high-quality issuer.”

The proceeds of this issue will finance projects which fulfil NIB’s environmental mandate and are eligible for financing under the Environmental Bond Framework. Among the first projects to receive funding are a waste-to-energy plant in the Helsinki metropolitan area, a hydropower plant in Norway and a new train line from the city centre to Helsinki airport.

“Investors need transparency as to which projects are being financed with the proceeds of our new issue”, says Mr Hellerup.

Marc Briand, Head of Portfolio Management at the French asset manager Mirova, agrees:

“NIB is advanced in terms of transparency, process selection, sustainability analysis of each project, and impact reporting.”

Environmental issuance has become an important part of the Bank’s funding programme. In April, NIB issued a SEK 1 billion NIB Environmental Bond. NIB is planning to continue issuing environmental bonds in 2016.

For more details on the transactions, read a press release.

NIB Environmental Bonds