Landshypotek Bank issued the first green covered bond from Sweden and the first backed by forestry loans today (Wednesday), a SEK5.25bn five year issue that attracted final demand of more than SEK7.2bn.

Leads Danske, Handelsbanken and Nordea launched the five year deal this morning with guidance of 29bp-32bp over mid-swaps, indicating that the deal’s size was expected to be LCR Level 1B-equivalent.

After around one hour and 20 minutes, the leads revised guidance to 27bp-29bp with books around SEK12bn, excluding joint lead manager interest. The spread was later fixed at 27bp and the size at SEK5.25bn (EUR510m) with books above SEK7.2bn good at re-offer, excluding JLM interest.

Landshypotek held investor meetings yesterday (Tuesday) to present its green bond framework. Under Landshypotek’s green bond framework, proceeds can be used to finance sustainable forestry, renewable energy and green buildings. As previously reported, the inaugural issue is expected to finance only sustainable forestry, financing forestry loans already included in Landshypotek’s cover pool.

Only one other green covered bond has been issued out of the Nordic region to date, a EUR1bn issue for Norway’s SpareBank 1 Boligkreditt in January.

Although the new issue is the first green covered bond issued out of Sweden, the country has taken a leading role in the wider green bond market, with EUR9.7bn equivalent of outstandings as of the end of 2017 making it the sixth largest green bond market in the world and by far the largest in the Nordics, according to figures from the Climate Bonds Initiative (CBI). Almost EUR6.5bn equivalent of the Swedish green bonds outstanding are denominated in Swedish kronor.

Photo credit: Landshypotek