DNB first Nordic bank to launch green bond with renewables deal

DNB on Wednesday became the first commercial bank from the Nordic region to sell a green bond, issuing a Nkr1bn (Eu115m) five year deal whose proceeds are earmarked for financing renewable energy projects.

DNB said that its green bond was independently assessed by DNV GL, which assesses, classifies and advises on ship and energy matters, and was found to conform to Green Bond Principles, a set of recommendations for green bonds established by a group of financial institutions that the International Capital Market Association (ICMA) supports.

The bank said that as a significant market participant in the financing of energy and the renewable sector in Norway and internationally it is well positioned for strong growth anticipated in these areas, especially solar, wind and hydroelectric power.

“Green bonds are a very exciting instrument, and the capital raised enables us to finance major parts of 14 hand-picked wind power projects in which DNB is involved in Ireland, England and Sweden,” said Berit Henriksen, head of DNB’s energy division (pictured). “We believe that the green bond market has a bright future, and DNB would like to be part of this.

“We note that institutional investors and private savers are increasingly interested in sustainable investments, and some investors also have their own specific ‘green’ or sustainable asset management mandates,” he added. “This means that green bonds could give us access to new and different sources of capital than our ordinary bond issues.”

According to a funding official at DNB, the five year issue was priced at 52bp over three month Nibor, which he said was on a par with what the bank would achieve with a standard bond issue in the Norwegian market.

The new issue will be listed on the Oslo Stock Exchange in a new green bond list that has recently been established.

Tanguy Claquin, managing director and head of sustainable banking at Crédit Agricole CIB, welcomed DNB’s transaction, and forecast more activity from banks.

“For green bonds, 2015 is expected to be a year of financial institutions,” he said. “We are replicating green bonds in all markets and the only place where we are really still lacking big benchmark transactions is in the financial institutions space.

“This is the first in Scandinavia, but it’s still a small trade, and many people would expect a large financial institution to bring a real green benchmark to the market this year.”

Main photo credit: Webcast/DNB; Henriksen photo credit: DNB

ABN AMRO