28 Jan 2018
Funding 2018: Relying on proven strategies
In 2018, NIB expects to raise EUR 5.5–6.5 billion in new funding—about as much as last year, when the Bank raised EUR 5.9 billion. The Bank will carry on its strategy for acquiring funds in international capital markets, which includes issuing global benchmark transactions as well as continuing the NIB Environmental Bond (NEB) programme, accompanied by smaller deals in various currencies.
This year, NIB is planning to issue two to three global, USD-denominated benchmarks in shorter and intermediate maturities. The Bank’s green bond programme will continue, with issues planned in EUR and in Nordic currencies. Transactions in other public markets, like AUD, NZD or GBP, will complement the funding programme. Finally, the bank will continue to serve specific investor needs and issue smaller, structured private placement transactions.
“In the new year, our proven strategies will continue to guide our activities. Being renowned for its frequent USD global benchmark transactions since 2002, the Bank has become a major Nordic issuer of green bonds. In combination with our activities in other public and private placements, these markets offer us diversification of currencies and investors, which among others is part of our funding strategy”, says Jens Hellerup, Head of Funding and Investor Relations at NIB.
Since the beginning of 2018, NIB has raised EUR 2.1 billion. Very recently, NIB issued the first USD global benchmark of the year. Investors from around the globe welcomed the three-year USD 1 billion bond and the transaction was more than 1.5 times oversubscribed (click here to read more).
The Bank was the first issuer to seize opportunities in the Kauri market, and issued a NZD 400 million, 2023 transaction in early January. Due to high redemptions, the primary market for bonds denominated in GBP usually gets off to a brisk start. This year was no exception, so NIB has issued a five-year, GBP 500 million bond, the Bank’s single largest offering in GBP. In addition, bonds in EUR, MXN, NOK and SEK have been issued. Click here for more information on current issuance.
Last year, NIB’s funding amounted to EUR 5.9 billion through 58 transactions in 12 currencies, with an average maturity of five years. A very substantial part of the funding was raised through two global USD benchmark transactions: a USD 1.25 billion issue with a five-year maturity was issued in January, and in September, three-year, USD 1 billion notes were placed.
“Demand for both transactions exceeded the issue size, which is proof of the appeal of NIB to investors worldwide. By choosing different maturities, the Bank was able to attract different investors: the largest investor group in the five-year transaction were bank treasuries, while the three-year maturity attracted central banks and other official institutions”, Mr Hellerup comments.
During the summer, a two year, USD 500 million issue was placed to cater for liquidity needs from collateral payments under derivative contracts.
“Good timing of benchmark transactions is essential for NIB; however, liquidity requirements from collateral obligations can materialise on very short notice, so the Bank needs to react dynamically to funding needs during the year, too”
Jens Hellerup
Senior Director, Head of Funding and Investor Relations at NIB
Phone: +358 961 811 401
E-mail: jens.hellerup@nib.int
The Environmental Bonds fit well with NIB’s mandate for environmental lending and help to diversify the investor base. In 2017, NIB issued seven environmental bonds with a total size of EUR 920 million. Click here to read more about NIB Environmental Bonds.
In May 2017, the Bank increased the EUR 500 million, 2024 green bond to EUR 1 billion, which made it the largest outstanding NIB Environmental Bond. The green bonds in Swedish kronor have for many years been an important part of the programme: for instance, the 2023 line of SEK 1.5 billion initiated in 2016 was increased to SEK 3 billion last year.
Other public issues and private placements helped to further diversify the Bank’s funding sources. Member country currencies (EUR and the Nordic currencies) represented 29% of the total issuance in 2017, which is the highest share historically. The share of USD funding dropped in 2017 by more than 10%, which reflects three USD benchmark issues in 2016, versus two last year.
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