Kommuninvest achieves lower funding cost with green bond

Kommuninvest has issued its fifth green bond, and its third in Swedish krona. On Tuesday, the Swedish local government debt office issued a short 5-year SEK 3 billion green bond in an oversubscribed transaction that enabled pricing at 2.5 b.p. inside the issuer’s regular Swedish krona benchmark curve. The performance mirrored Kommuninvest’s previous SEK green bond, issued in April 2018 at 3 b.p. inside the curve.

The new green bond attracted a total of 29 domestic and international institutional investors, including AP7, APG on behalf of its pension fund clients, Captor, Cliens, Czech National Bank, Danske Asset Management, Danske Bank A/S, Handelsbanken Asset Management, LF Bank, LF Jönköping, LF Västernorrland, MP Pension, Nordea Asset Management, SBAB Bank and Swedbank Robur. The bond matures in June 2023.

Since Kommuninvest launched its green finance programme in June 2015, SEK 20.4 billion has been issued in green bonds, making Kommuninvest the largest Swedish issuer. Five green bonds have been issued to date, of which three in Swedish kronor and two in US dollars. The final order book amounted to SEK 5.3 billion, with participation from eleven countries. both domestic and international investors. The bond is estimated to have priced 2.5 basis points inside Kommuninvest’s outstanding Swedish bond programme curve.

Per-Erik Grahn, Nordea Asset Management, commented the transaction:

– We have grown accustomed to look for opportunities in the capital markets to leverage on sustainability. This bond from Kommuninvest, albeit be it with a tight price, constitutes such an opportunity. We look forward to follow up on the use of proceeds by means of the impact report.

Kommuninvest green bonds finance lending to investment projects in some 100 Swedish municipalities and county councils/regions, including the new surgery center at the main hospital in Karlstad, the Ängen wastewater treatment facility in Lidköping, the ecological residential district Aspö Ekologi in Skövde and the Wisby high school premises on the island of Gotland.

Green bonds also finance one of Sweden’s most innovative remodeling projects, where the municipal housing company Vårgårda Bostäder renovates and upgrades a housing district from the 1960s to become fully self-sufficient for energy.

Kommuninvest allocates green bond proceeds to lending for green investments, e.g. Green loans. As of early October 2018, Kommuninvest’s portfolio of Green loans amounted to a total of SEK 35.2 billion in commitments to 209 projects in 98 municipalities and county councils/regions. Kommuninvest expects to continue to grow its green loan portfolio, and to be able to be a frequent issuer of green bonds, in multiple currencies.

Comment from Tobias Landström, Deputy Head of Debt Management at Kommuninvest:

– The green bond market is growing rapidly and we are pleased to see the strong interest for this transaction, with investors from eleven countries. The fact that we can obtain lower funding costs demonstrate the tangible value of sustainability and makes it easier for Kommuninvest to support the green transition of the municipal sector.

UN award for green finance model

Kommuninvest’s role as an aggregator and conduit issuer for cost-efficient funding of public sector investments has been recognized by the United Nations, which awarded Kommuninvest its United Nations ‘Momentum for Change’ Climate Solutions Award, in connection with the COP23 climate conference in Bonn, Germany, in 2017.

Contact information

Tobias Landström, Deputy Head of Debt Management
tel: +46 10 470 88 83, tobias.landstrom@kommuninvest.se

Björn Bergstrand, Head of Sustainability/Senior Investor Relations Manager, tel: +46 70 886 94 76, email: bjorn.bergstrand@kommuninvest.se

More information here and here.