NIB funding: 2016 breaks records

The year 2016 has proven to be a record-breaking one for NIB. The total amount of funding raised by NIB is reaching EUR 6.5 billion, which is the largest volume ever.

Higher than expected loan disbursements and changes to the Bank’s derivative contracts have led to the increase the Bank’s funding needs for 2016.

The Bank issued three global USD benchmarks in 2016: a three-year, USD 1.25 billion issue in February; a five-year, USD 1 billion issue in July; and a two-year, USD 1 billion issue in September. For the first time the Bank accessed the floating rate market with a USD 500 million two-year note.

“All of NIB’s global benchmarks were oversubscribed with support from global investors”, says Jens Hellerup, Head of Funding and Investor Relations at NIB.

“The orderbook offered NIB good diversification of investors of different types and from different regions worldwide.”

Another target of the year was to continue issuing NIB Environmental Bonds (NEBs). In January, the Bank issued a five-year, SEK 1 billion NEB and in September a seven-year, SEK 1.5 billion NEB. Both transactions attracted environmentally focused investors; they were mainly from Sweden, but some offshore investors also got involved. A transaction of EUR 500 million with an eight-year maturity was sold in June.

“NIB Environmental Bonds have acquired a brand name in the market. The EUR transaction attracted a wide range of investors with a focus on sustainable investments,” Mr Hellerup explains.

All of the NEB proceeds have been fully placed with eligible loan projects (read more about NEB bonds and projects).

In addition to the global USD benchmarks and the NEBs, the Bank diversified into a number of other public and private transactions in a variety of different currencies and structures (see funding transactions). For example, two transactions denominated in GBP were sold, in March and October.

For the next year, NIB is planning a funding target of about EUR 5 billion. The funding strategy will stay unchanged from previous years.

“The Bank expects to issue two to three global benchmark transactions in USD. In addition, the team will be actively looking for opportunities to diversify funding sources by issuing in a variety of currencies and formats”, says Mr Hellerup.

NIB remains committed to the green bond market. A promising pipeline of projects eligible for environmental bond financing indicates that the Bank, as in the past three years, will be able to issue NIB Environmental Bonds in benchmark format in either EUR or USD. In addition, the Bank could look at NEB transactions in the form of public transactions or private placements.

NIB continues to play an active role in the development of the market: at the beginning of the year, the Bank was elected into the executive committee of the Green Bond Principles, a body within the ICMA that aims to develop the green bond market further. More specifically, NIB is involved in the working groups discussing impact report and questions around green project eligibility.