Yesterday, The Nordic Investment Bank (NIB) issued their 6th (and largest!), green bond, to date: The USD 500mn, AAA-rated bond, with 7-year maturity and 2.25% coupon, was more than 1.6x oversubscribed, according to the bank’s press release. Joint book runners were BofA Merrill Lynch, Crédit Agricole CIB and SEB.
This bond is exciting for several reasons: first, it’s significantly larger than NIB’s previous green bond issuances, and such benchmark size deals is what we need to attract mainstream investors to green bonds. Second, it’s the longest green bond issued by a supranational in USD to date. Longer tenor allows a better match between institutional investors’ liabilities and the timeframes of green projects.
The bond placed with 39 investors, of which 85% where green investors – including Blackrock and CalSTRS. In terms of types of investors, 30% were Central Banks and Official Institutions, 41% banks, 28% fund managers and 1% pension and Insurance companies. As we repeatedly mention, broadening the investor base is a central motivating factor for green bond issuers, and this is also the case for NIB: For this bond, over 1/3 of the investors were first-time investors in NIB bonds in the primary market. That is some good investor diversification!
The Nordic Investment Bank has an on-going environmental bond programme; the green credentials of their green bond framework are verified by a second opinion from CICERO. Details of eligible project criteria, as well as projects funded with green bonds proceeds to date (along with data on emissions saved), are published on their website.
It is great to see such level of disclosure! We are impressed with NIB's green bond efforts. The only thing we see that could make it even better (as mentioned before) is to confirm explicitly how their green lending criteria compare to industry definitions such as the Climate Bonds Standard or the green definitions of the bigger development banks – they might be aligned, we just don’t know - as this would allow investors to compare its green credentials to other green bond issuers more easily
But, overall, NIB is doing great work with their numerous green bond issuances! Will they go for an even larger issuance next time?