Nordic Investment Bank’s Environmental Bonds Draw Over EUR 1.3 Billion in Investor Interest

Nordic Investment Bank’s Environmental Bonds Draw Over EUR 1.3 Billion in Investor Interest

(IN BRIEF) The Nordic Investment Bank (NIB) launched a seven-year fixed-rate EUR 500 million Environmental Bond (NEB) on January 17th, with proceeds earmarked for environmentally beneficial projects. This issuance brings NIB’s total green bond issuance for 2024 to EUR 570 million. The bond attracted a high-quality order book, with a final book exceeding EUR 1.3 billion, indicating strong investor demand and a well-diversified investor base. The NEB yielded 2.661% and was initially offered at MS+8 basis points but tightened to MS+6 basis points due to high demand. NIB aims to expand its Environmental Bond offerings throughout the year as part of its commitment to sustainable financing.

(PRESS RELEASE) HELSINKI, 18-Jan-2024 — /EuropaWire/ — On January 17th, The Nordic Investment Bank (NIB), an international financial institution with focus on the Nordic and Baltic countries, took a significant step toward advancing environmental sustainability by launching a new seven-year fixed-rate EUR 500 million Environmental Bond (NEB). These bonds are specifically designed to channel funds into projects that offer substantial environmental benefits. This issuance marks a notable achievement for NIB, increasing its total green bond issuance for 2024 to EUR 570 million, building on its earlier success with a NOK 2.5 billion NEB issuance. These accomplishments underscore NIB’s deep commitment to sustainable financing, reflecting its determination to further expand its Environmental Bond offerings throughout the year.

The NEB garnered considerable interest from investors, resulting in a final book that exceeded EUR 1.3 billion, demonstrating strong demand for these environmentally focused bonds. What’s particularly noteworthy is the diverse investor base that participated in this bond issuance, comprising central banks and other official institutions (40%), asset managers (29%), bank treasuries (29%), and various other investor types (2%). This wide range of investors underscores the global appeal and significance of the NEB.

The transaction was expertly managed by joint-lead managers, including Credit Agricole CIB, Danske Bank, and Natixis. Initially, the NEB was offered with a fixed annual coupon of 2.625% at an MS+8 basis points spread. However, due to the overwhelming investor demand, the re-offer spread tightened to MS+6 basis points, resulting in a price of 99.773 and an attractive yield of 2.661%. This meticulous pricing adjustment was made to align with market conditions and meet investor expectations.

Jens Hellerup, Head of Funding and Investor Relations at NIB, expressed delight at the strong support from sustainable investors and the successful strategy deployed for this issuance, commented “Despite the high supply in EUR from SSA peers early in the year, we were happy to see how sustainable investors support the NIB’s Environmental mandate. With a book which was 2.5 times oversubscribed, it is clear that the NIB Environmental Bonds are appealing to the investors.  We have been following the market since the beginning of the year and the strategy to find a day where there was not too much competing supply from our peers worked very well.”

Kim Skov Jensen, NIB’s Vice President & CFO, highlighted the critical role these NEB bonds play in linking NIB’s environmental mandate with its funding strategy. He said “Financing environmental projects is crucial to NIB’s mandate. NEB bonds enable us to link this important mandate with the liability side. This green EUR benchmark bonds follows a Norwegian kroner denominated NEB benchmark we placed earlier in the year. The reason why NIB can issue green bonds already so early in the year, is that we experience record demand for loans to environmental projects. It is encouraging to see sustainability focused investors’ strong support for our investments.”

Emmanuel Smiecench, Co-head Public Sector Origination & Syndication at Natixis, praised NIB’s strategic positioning and its ability to seize an opportune moment in the market, stating “NIB issued yet another successful Environmental bond in returning to the Euro market and demonstrated the strong interest from this investor base for the name. Congratulations are owed to the funding team which not only navigated a busy beginning of year to take a window of limited supply but targeted the significant demand from high-quality accounts on this part of the curve. The adaptability of NIB to strategically position this trade to take advantage of the conditions, without compromising on pricing objectives was executed with a precision that will not only extend the Euro curve but prepare it for a future Euro benchmark. It was an absolute pleasure for Natixis to partner with NIB on this transaction and we look forward to achievements by this issuer in 2024.”

Gustav Landström, Head of SSA Origination at Danske Bank, commended NIB for managing to attract top-quality investor demand despite the competitive environment in the European bond market. “Congratulations to the NIB team on another fantastic result in the EUR market issuing an over two times oversubscribed 7-year Environmental Bond at a level in line with leading EUR benchmark issuers. Despite a busy primary market in EUR, NIB managed to attract top quality investor demand thanks to its high quality and well proven NEB program and top credit quality. Danske Bank is proud to have supported NIB on another successful NEB transaction.”

Lawrence Duquesne-Garner, Managing Director, SSA DCM Origination at Credit Agricole CIB, congratulated NIB on its successful return to the Green Bond market. “We would like to congratulate the NIB team for today’s successful return to the Green Bond market. The new EUR 500mn 7-year Nordic Environmental Bond appealed to a wide range of investors, as demonstrated by the exceptionally high-quality and oversubscribed orderbook. CACIB was very pleased to be part of this successful benchmark.”

NIB’s commitment to transparency and accountability is evident in its reporting on the impact of each financed project and the aggregated impact across seven different financing categories. Detailed impact tables and a comprehensive list of all projects financed can be found on the Bank’s website, allowing stakeholders to gain deeper insights into NIB’s contributions to environmental sustainability through these bonds. For more information on NIB Environmental Bonds, interested parties can visit the bank’s website.

Overall, this press release highlights NIB’s strong dedication to environmentally responsible financing, its successful issuance of the NEB, and its strategic positioning in the sustainable finance landscape. It also underscores the broad appeal of these bonds to a diverse and globally distributed investor base.

NIB is an international financial institution owned by eight member countries: Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden. The Bank finances private and public projects in and outside the member countries. NIB has the highest possible credit rating, AAA/Aaa, with the leading rating agencies Standard & Poor’s and Moody’s.

For further information, please contact

Jens Hellerup, Senior Director, Head of Funding and Investor Relations, at +358 961 811 401, jens.hellerup@nib.int

Angela Brusas, Director, Funding and Investor Relations, at +358 961 811 403, angela.brusas@nib.int

Alexander Ruf, Director, Funding and Investor Relations, at +358 961 811 402, alexander.ruf@nib.int

SOURCE: Nordic Investment Bank