Yet another over-subscription as Norway's Kommunalbanken closes its USD500m AAA 3yr green bond @0.75%. With demand this strong and rates this low, perhaps we can get on with rebuilding the world's infrastructure?

For those non-bankers among you, over-subscription means getting more orders than you can fill - in the case of most climate and green bonds this year, way more.

Kommunalbanken (KBN) had USD840 million of orders from over 40 investors, 58% of which were "socially responsible investment (SRI) portfolios". Given the number of times central banks appearing on green bond buyer lists (see below), everyone's turning into an SRI buyer nowadays. And that's the way it should be.

KBN offers discounted interest loans to Norwegian municipal climate related projects. (Excellent idea that should be followed in other countries!) Funds raised with the green bond are linked to this program.

The bond was priced at mid swaps +13 basis points – that means 0.75% interest. With rates that low we should be embarking on a vast global (green) infrastructure splurge! Which of course what we need to do ...

Buyers:

  • US 39%. Good result for a plucky Norwegian Bank.
  • Rest of Americas 13%
  • Europe 30%
  • Middle East & Africa 16%
  • Asia 2%
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Types of buyers

  • Central banks/official institutions 28%
  • Banks 23%
  • Corporates 20%
  • Asset managers 17%
  • Insurance & pension funds 12%
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Lead Managers: Bank of America Merrill Lynch, Citigroup, Morgan Stanley and SEB