Extremely strong investor demand for MuniFin's ina

Extremely strong investor demand for MuniFin's inaugural EUR green bond

On 26 September 2017, Municipality Finance (MuniFin) issued a new 10-year EUR 500 million green bond. This was the second green bond issued by the company, and the first one in euros. Investor demand was extremely strong from the beginning and the book was almost six times oversubscribed.

- We did expect a marked oversubscription as the demand for responsible investments is currently growing. MuniFin enjoys an excellent reputation among investors, and our green framework received a very positive welcome in investor meetings prior to the issue, says Joakim Holmström , Vice President, Head of Funding at MuniFin.

This is by far the most sought after benchmark in the history of MuniFin both measured by the size of the bond. Almost 100 investors participated, which is more than for any other benchmark bond previously offered by MuniFin.

The decision to enter the green bonds market was a strategic one for MuniFin. These bonds can help MuniFin to expand its international investor base while at the same time allowing MuniFin to accelerate the sustainable investments the Finnish municipal sector makes.

A flying start for green financing

MuniFin has offered green financing for its customers' environmental investments since spring 2016. The project portfolio is currently approaching EUR 1 billion.

- We can already see how the margin discount we offer for these projects is guiding our customers towards more ecological choices when they plan their investments, says Antti Kontio, Manager, Funding and Head of Corporate Responsibility at MuniFin.

MuniFin intends to continue issuing green bonds on a regular basis. The size of the bonds and issuance frequency will depend on the demand for green financing. So far, the demand has been a positive surprise for MuniFin. In the future, sustainable and low-carbon construction projects are expected to account for the most significant growth in the portfolio.

- From the climate impact perspective, we would like to see more renewable energy projects in our portfolio, Antti Kontio comments.

Transaction information

MuniFin's second green bond was priced on 26 September 2017 and its value date is October 3, 2017. The 500 million 10-year bond was priced 7 basis points below mid-swaps. Fixed coupon for investors is 0.75 % and price 99.724%. The book reached EUR 2.8 billion before closing at 10am CET on 26 September 2017.

The investor base was primarily European. Germany accounted for 24%, Nordics 22%, France 13%, Asia 12% and other Europe 29%. Banks were the largest investor group for 44% followed by insurance/pension funds 25%, central banks and official institutions 20% and asset managers 10%.

Lead arrangers of the bond were BnP Paribas, Credit Agricole CIB, DZ Bank and Nordea.

What is green financing?

Projects for the green portfolio are selected by an external Green Evaluation Team comprised of environmental experts. The selected projects must meet the criteria set forth in MuniFin's Green Bonds Framework. Projects are given a discount on the margin, depending on the scope of their environmental impacts.

Projects receiving green financing:  https://www.munifin.fi/projects-receiving-green-financing

Further information:

Joakim Holmström, Vice President, Head of Funding Tel. +358 50 4443 638,  joakim.holmstrom@kuntarahoitus.fi

Antti Kontio, Manager, Funding, Head of Corporate Responsibility Tel. +358 50 3700 285, antti.kontio@kuntarahoitus.fi