Kommuninvest has issued its fourth green bond, and its second in Swedish krona. On Monday, the Swedish local government debt office issued a 3.6 year SEK 3 billion green bond in an oversubscribed transaction that enabled the issuer to price it at 3 b.p. inside its regular Swedish krona benchmark curve. The transaction was the second largest green bond in Swedish krona this year.
The new green bond attracted both domestic and international institutional investors, including Affirmative Investment Management, AI Pension, AP7, Blackrock, Danske Capital, the Folksam Group, Länsförsäkringar Bank, Nordea Asset Management, PostFinance AG, Raiffeisen KAG, SEB Asset Management, Swedbank Robur and Öhman Asset Management.
Since Kommuninvest launched its green finance programme in June 2015, SEK 17.4 billion has been issued in green bonds, making Kommuninvest the largest Swedish issuer. Four green bonds have been issued so far, two of them in Swedish kronor and two in US dollars. Monday’s transaction from Kommuninvest was the second largest in Swedish kronor in 2018. The final order book amounted to SEK 4.5 billion, with participation from both domestic and international investors.
Kommuninvest green bonds finance lending to investment projects in some 80 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.
According to the issuer’s impact report, investment projects financed by Kommuninvest green bonds contribute to reduce or avoid nearly 515,000 tonnes in annual carbon dioxide emissions. This corresponds to emissions of approximately 350,000 cars with an annual mileage of 12,000 kilometres.
Comment from Christian Ragnartz, Head of Debt Management at Kommuninvest:
– The green bond market is growing strongly and we are pleased to be able to contribute with this year’s second largest transaction in Swedish kronor. Investors include reputable green investors, both Swedish and international. The fact that investors are willing to accept a reduced yield for green demonstrate the tangible value of sustainability, and makes it easier for Kommuninvest to support the green transition of the municipal sector.
– Looking at the pace and direction of Swedish local government investment, we see a lot of potential for further growth in green lending, says Christian Ragnartz. We estimate that, in a few years, 15-20 percent of our lending will finance green projects, compared with just over 6 percent today.
Tomas Werngren, Kommuninvest’s President and CEO, believes that local government entities can provide significant contributions towards greening financial markets, which by world leaders has been identified as an important component to achieve global climate objectives.
– Green bonds have been identified as important enablers to finance the investments necessary to achieve the Paris agreement objectives. The municipal sector invests in excess of SEK 150 billion a year, often in climate and environment-related projects such as buildings and energy infrastructure, he says. The fact that so many municipalities now choose Green loans for their investments is testament to a strong interest in showcasing measures taken to address local and global climate challenges.
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.
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.
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Björn Bergstrand, Head of Sustainability/Senior Investor Relations Manager
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Tobias Landström, Deputy Head of Debt Management
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Christian Ragnartz, Head of Debt Management
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