Swedish export credit institution launches $500m green bond – “driven by ESG investors”

CalSTRS, Mirova back first green bond by a European export credit body

The Swedish state export credit institution has issued its inaugural five-year $500m green bond – the first by a European export credit body – in a transaction it says was “driven by ESG investors”.

AB Svensk Exportkredit (SEK) said the proceeds would be utilized to support the financing of climate friendly projects according to its own green bond framework such as those that target reducing greenhouse gas emissions or which help adapt to climate impacts.

Investors backing the issue included Trillium Asset Management, Mirova, Praxis Mutual Funds and the California State Teachers Retirement System (CalSTRS) while SEK Funding Director Mats Axelman said the bond gives it a “tool to channel capital into a low carbon economy”.

“Despite the challenging market conditions and ongoing negative headlines surrounding Greece, the order book grew steadily and approached $600m after two hours of book building, at which point the issue size was fixed at $500m,” SEK said in a statement.

“This $10m purchase was attractive to us because it is a strong credit and it adds diversification to our $245m in green bonds,” said Glenn Hosokawa, Director of Fixed Income at CalSTRS.Trillium said it was excited by the anticipated CO2 reduction reporting framework. Eligible projects are categorized in line with the www.swedishcleantech.se website. SEK utilizes a second opinion from Norway’s CICERO (Center for International Climate and Environmental Research – Oslo), which found the framework “has a very high probability of securing projects that support a low carbon and climate friendly future”.

The bond carries a coupon, or interest rate, of 1.875% per annum. SEK held a global investor call on June 12 due to the “strategic nature” of the transaction and its rarity as an issuer in the capital markets. “The transaction was driven by investors integrating ESG considerations within their investment process,” the statement added. “The participation rate of ESG investors was at 65%.” Asset managers took 29% of the issue, as did central banks and official institutions. Banks (26%) and pensions and insurers (16%) rounded out the investor base. BofA Merrill Lynch, Credit Agricole CIB, HSBC and SEB acted as joint-bookrunners. Link