4 Dec 2015
As funding year rounding off, NIB gearing up for 2016
The year 2015 has turned out to be a good funding year for NIB. The total amount of new funding transactions has reached EUR 4.5 billion by early December and is not expected to change significantly before year-end. For next year, the Bank is hatching a more extensive funding programme.
During 2015, NIB issued two global USD benchmarks: a three-year, USD 1.25 billion issue in March and a five-year, USD 1 billion issue in September. In both instances, the transactions were well received by investors and order books were oversubscribed. For more information, click on these links to the press releases:
One goal for the year was to continue issuing NIB Environmental Bonds (NEBs). In April, the Bank issued a five-year, SEK 1 billion NEB issue and in September a seven-year, EUR 500 million NEB issue—the first benchmark NEB in euros. Both transactions attracted environmentally focused investors who take an interest in NIB’s mandate for environmental lending. The proceeds have been placed with eligible loan projects (see the list of environmental bonds and NEB-financed projects).
Diversified funding sources are important for NIB, so in addition to the global USD benchmarks and the Environmental Bonds, the Bank was active with a number of other public and private transactions in a variety of different currencies and structures (see funding transactions).
For 2016, the funding programme is expected to be slightly higher at EUR 5–5.5 billion. NIB plans higher loan disbursements and higher liquidity due to increased collateral needs.
The funding strategy remains unchanged from previous years. The Bank plans to issue two to three benchmarks in USD global format, and potentially one of these issues could also be in the euro.
The Bank remains committed to the green bond market. The expected pipeline of projects eligible for Environmental Bonds indicates, similarly to the last two years, that one Environmental Bond in benchmark format in either the euro or US dollar can be expected. Smaller NEB transactions in other public markets or as private placements will be added.
NIB intends to support the green bond market not only through the commitment to issue NEBs, but also by assuming an active role in the work towards a more harmonised way of impact reporting with other IFIs, and by supporting the work of the Green Bond Principle guidelines.
Finally, NIB will look for opportunities to issue in other currencies and markets. The currencies of NIB’s Nordic owners play an important role, since part of NIB’s lending is in these currencies. Therefore, NIB is planning issues in these currencies. In previous years, issues denominated in Australian and New Zealand dollars were an important means of diversification, so NIB will strive to build upon the work done in these markets over the years.
“We think the larger funding volume will be positive for NIB’s funding programme, since we will be more visible for investors”, Jens Hellerup, Head of Funding and Investor Relations, summarises the expectations of the funding team for 2016.