Investors support Baltic cleanup through new bond issue

Nordic investors have highlighted a new fixed income instrument designed to support the cleanup of the Baltic Sea, one of the most poluted parts of the world's oceans.

The 2024 bond has been issued by the Nordic Investment Bank with an Aaa/AAA (Moody's/S&P) rating, offering a coupon of 0.375%. NIB said the SEK2bn (€194m) bond proceeds would focus on water resource management and protection, which includes wastewater treatment, prevention of water pollution and water related climate change adaption.

The Baltic Sea suffers from high levels of nitrogen and phosphorous discharged from the countries surrounding it, which means treating wastewater is necessary to ensure sutsainable development in future, particularly urban development, NIB said. It has already engaged in financing a number of projects linked to the Baltic Sea over the past 15 years.

Lars Eibeholm, head of Treasury at NIB, said: "NIB has been active in the green bond market since 2011 and is the largest issuer of green bonds in the Nordic region. The Nordic-Baltic Blue Bond is specifically aimed at investors that are conscious of the challenges facing the region's water resources, especially those affecting the Baltic Sea. It gives investors the opportunity to directly target water-related projects that address these challenges."

One of the projects that will receive financing from the Nordic-Baltic Blue Bond is the Nya Slussen project in Stockholm. NIB is not only financing clean transport solutions at the Slussen traffic hub, but also the redevelopment of the Slussen water locks. The expansion of the water locks will increase the drainage capacity and accommodate higher floodgates by adding two larger water channels beside the locks.

The Nya Slussen redevelopment project is a crucial flooding mitigation measure that will allow Stockholm and the Mälar region to prepare for the effects of rising sea levels and more extreme weather conditions in the future. For more on the project, visit NIB's website.

Christopher Flensborg, head of Climate & Sustainable Finance in Large Corporates & Financial Institutions at SEB, commented on the issue in light of SEB's role arranging the issue and as adviser.

"SEB acted as a lead manager for this SEK2bn transaction that supports water projects around the Baltic Sea. The bond, which was oversubscribed more than two times, will allow the financial sector to get a better understanding of the challenges of the Baltic Sea's ecosystems and the solutions to address these challenges."

"The Nordic Investment Bank has long sought an opportunity to issue a 'blue bond' directly tied to water-related projects. This has now been made possible thanks to the development of a quality-assured environmental framework coupled to a secondary assessment by the independent research institute Cicero."

Helena Lindahl, senior portfolio manager Storebrand Asset Management (featured previosly in InvestmentEurope discussing greeen bonds https://www.investmenteurope.net/investmenteurope/news/3724395/green-bonds-financial-instrument-term-change) said: "We have long been seeking a solution, on how to finance a better health of the Baltic Sea and are therefore thrilled to participate in NIB's Blue Bond. We hope that this, blue bond, will be followed by many others."

"The Baltic Sea region is the home of nine countries and 90m people. The health of the region is consequently very important. I therefore urge more companies in the region to take the opportunity and proactively utilize earmarked, green or blue loans. It is a very effective way to show determination, achieve true impact and long term sustainable growth."

To date, the NIB has financed over €3.5bn worth of projects through its Environmental Bonds.

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• Topics
• Fixed Income
• Storebrand Asset Management
• Baltic Sea
• Nordic Investment Bank (NIB)
• Nordic
• green bonds
• SEB
• ESG