Swedish state-owned bank SBAB planning inaugural real estate-linked green bond

Swedish bank SBAB is set to launch a green bond programme to finance green real estate.

The state-owned bank, which specialises in domestic property financing, including lending to real estate companies, housing cooperatives and homeowners, will roadshow its inaugural transaction around 14 June, with a view to coming to market with a benchmark-sized deal in Swedish krona.

Proceeds from notes issued under the green bond framework – which will be part of SBAB’s broader €13 billion medium-term notes programme – will be used to finance properties with a nationally- or internationally-recognised energy efficiency rating. The lion’s share of the buildings are expected to be residential, SBAB told Responsible Investor, but commercial properties are also eligible.

Climate research body Cicero provided a second-party opinion on the framework, saying it had “no obvious weaknesses” but only awarded it a ‘medium green’ rating on its three-tier scale, meaning it “represents steps towards the long-term vision, but are not quite there yet”.It recommended SBAB select a higher threshold for property verification levels: for example, it only requires ‘silver’ ratings under the Miljobyggnad energy efficiency scheme, instead of ‘gold’. It also suggested including additional energy efficiency criteria and adaptation measures.

The green bond programme may also be used to finance retrofits to existing properties in future, SBAB told RI.

SBAB, which states it is working towards a “green cycle of money, where we borrow green and lend green”, recently launched a green retail loan, Energilånet. Ebba Lindsö, chair of Swedish state fund Sjätte AP-fonden (AP6), sits on its board.

Last month, Stockholm County Council in Sweden issued a five-year SEK1.5bn (€161m) green bond – with proceeds earmarked to support green projects as defined in its green bond framework. Joint bookrunners were Crédit Agricole CIB and Danske Bank and the transaction was driven by investors with a “sustainable investment approach”, the council said.