9 Dec 2020

Funding in 2020: Supporting NIB’s COVID-19 response

At the start of 2020, NIB’s estimated funding plan was in the range of EUR 5.5-6.5 billion, with the estimate to a big extent relying on a proven strategy from previous years. However, the outbreak of the COVID-19 pandemic increased the Bank’s lending and we upsized this year’s funding plan accordingly to EUR 7.5 billion. The funding plan expected for 2021 is in the range of EUR 6.5-7.5 billion.

We at NIB are very much looking forward to 2021, but on the cusp of a new year it is very difficult to predict where it will lead us. Will we experience economic upswing during the first half of the year, or will we see a further downturn from a new pandemic wave before the awaited vaccines are distributed?

“NIB is in a very strong position to meet any challenges in 2021. The update of the NIB statutes, which you can read more about here, has not only strengthened the relevance of NIB in the Nordic-Baltic region, but also means that we are more agile and flexible to meet challenges in the future”, says Mr Jens Hellerup, Head of Funding and Investor Relations at NIB.

The estimated funding plan for year 2021 is EUR 6.5-7.5 billion. The previous years’ funding strategy will to a large extent be copied in 2021. This indicates issuances of at least two global USD benchmark bonds as well as environmental bonds, where we expect at least one EUR benchmark. The pipeline for environmental lending with a very strong mandate indicates that we should be able to issue more NIB Environmental Bonds compared to previous years. These will be complemented with other public issues and private placements offering diversification.

2020
As of beginning December 2020, NIB has raised EUR 7.4 billion in new funding (EUR 4.7 billion in 2019).

“Looking back at 2020, we feel proud. Not only did we achieve the normal goals for the year, but in addition, due to the consequences of COVID-19, we were able to respond very quickly to the request for supporting our member countries in the form of a newly established Response Bond framework and Response Bond issuances”, says Jens Hellerup. 

Jens Hellerup

“NIB is in a very strong position to meet any challenges in 2021. The update of the NIB statutes has not only strengthened the relevance of NIB in the Nordic-Baltic region, but also means that we are more agile and flexible to meet challenges in the future”

Jens Hellerup

Senior Director, Head of Funding and Investor Relations at NIB

 

We issued two NIB Response Bonds one in March and one in April 2020: the first was a three-year EUR 1 billion bond and the second was a three-year SEK 4 billion bond.

“We are pleased to see the reception of these bonds in the market as both deals were significantly oversubscribed. This is a clear signal that the global investor base is looking for more than risk and return. Impact also matters”, says Mr Hellerup.

Despite the sudden impact of the COVID-19 pandemic on the funding plan, the funding team also managed to carry out the original funding strategy for the year. This includes the issuance of global USD benchmark bonds and NIB Environmental Bonds under the NIB Environmental Bond Framework.

In May, the Bank issued a three-year USD 1.5 billion global benchmark and further a USD 1.5 billion bond in September with a five-year maturity, both of which attracted strong support in excess of USD 2.75 billion and USD 2.2 billion, respectively.

“Both transactions attracted new investors. Central banks and bank treasuries remain the main investor bases, but both asset managers and pension and insurance have become more important”, Mr Hellerup says.

The Nordic Investment Bank continues to have a strong presence in the sustainable bond market. During 2020, the Bank raised a total of EUR 643 million under the NEB programme, consisting of a seven-year EUR 500 million NIB Environmental Bond and a five-year SEK 1.5 billion Nordic–Baltic Blue Bond. During 2011-2020, NIB has issued a total of EUR 4.9 billion equivalent in NIB Environmental Bonds under its environmental bond framework.

“Although short-term and immediate response to the current crisis is important, we find it crucial to also continue with our long-term sustainable finance strategy, such as addressing climate change challenges’, says Mr Hellerup.

Transactions in other public markets during the year consisted of bonds denominated in GBP, NZD, NOK, and SEK. Public market transactions were complemented with private placement transactions. For a full list of funding transactions, please click here.