BKK, a Norwegian power company based in Bergen, yesterday closed Norway’s first corporate green bond. It overtakes IBRD’s NOK 400m bond as the largest green issuance in Norwegian Krone. Demand from domestic investors was high - the bond was placed in under 3 hours to 11 different investors - pushing the issue from proposed NOK 1bn to NOK 1.1bn. Tenor is 7 years, the coupon is floating at 59.00 above NIBOR (the Norwegian Interbank Offered Rate) and SEB were the sole organiser of the unrated deal.
BKK will use the proceeds of the bond to fund hydropower projects on the West Coast of Norway. CICERO has done a great job with the second opinion on the environmental framework. They highlight BKK’s strong environmental policies as well as risks to natural environment of building such large scale infrastructure projects. Clearly BKK had been upfront about project controversies and CICERO has completed an in-depth review highlighting relevant concerns to investors. Rigorous 2nd party review, like this CICERO review, is exactly what is required to grow a truly robust green market.
Reporting to investors on environmental impacts will be through a public annual investor letter. This will include details of the all projects financed, examples of projects and a summary of BKK’s green bond development. With such strong reporting standards already embedded within the BKK we look forward to seeing the report next year.
Look out for more issuances from BKK – the press statement states they would issue up to NOK 2bn – so there may be a further 0.9bn coming along for investors who missed out the first time round.
Look out also for a lot of hydro backed bonds from Europe and North America.
