Korea sovereign fund backs new EIB Climate Awareness Bonds

Korea’s sovereign wealth fund, the KRW41.3trn ($36.2bn, €27.5bn) Korea Investment Corporation, is among the investors in the new issue of Swedish Krona-denominated Climate Awareness Bonds from the European Investment Bank.

The EIB has announced the completion of a new issue of seven-year SEK1bn Climate Awareness Bonds, which offer investors the opportunity to finance climate protection projects.
“We continue to see broader interest and warmly welcome the new Climate Bond investors SBAB, Apotekets Pensionsstiftelse and Korea Investment Corporation,” said Christopher Flensborg, Head of Sustainable Products and Product Development at joint bookrunners SEB. The other bookrunner was Deutsche Bank.
Apotekets Pensionsstiftelse is the SEK10bn Swedish apothecaries’ pension fund and SBAB is the Stockholm-based banking group founded in 1985.

Despite KIC’s interest, demand for the issue was dominated by Nordic investors, led by pension funds and fund managers.Seventy-three percent of the allocation went to the Nordic countries, 22% to Germany and 3% to Switzerland. Asia accounted for 2% of the allocation.
Pension funds accounted for 54% of investors, with banks and fund managers at 22% and 23% respectively, the EIB said.
Funds raised via the bonds are used to finance renewable energy and energy efficiency projects backed by the EIB. The EIB’s lending in this area grew to €7bn in 2011.

“Tremendous response from a diverse group of investors”

“We were particularly pleased with the tremendous response this issue received from a diverse group of investors, which is testament to the appeal of EIB as an issuer and the interest generated by a Climate Awareness offering,” said Jan Wipplinger, co-head of Non Core Currency Bonds at Deutsche.
KIC, which launched a London office at the end of last year, named Dong-ik Lee as its new Chief Investment Officer as of the start of April.