Milestone for Green Finance
Having recently issued its third green bond since the start of the year, KBN has in 2021 borrowed a total of over NOK 9.5 billion in the green bond market.
KBN now has over NOK 30 billion in outstanding green lending to the Norwegian local government sector. Both are new records for KBN, which has been one of the most active institutions in the area of green finance in Norway for over a decade.
The recent transaction, which raised CAD 500 million, followed bond issues in both US dollars and Australian dollars earlier this year, and strengthens KBN’s presence in the global green finance markets.
Larger order books and better prices
KBN's first green issuance 11 years ago was due to demand from Japanese investors. Since then, we have seen a strong increase in investors with ESG mandates. The trade we completed in Canadian dollars would probably not have taken place had it not been in a green bond format. For the Australian dollars transaction, 75% of the investors had an ESG mandate. Green bonds are helping us to access a wider investor universe from which to borrow, as well as to achieve better prices and more differentiated order books. The order book for the green bond we issued in US dollars was 2.4 times oversubscribed. Two thirds of the amount raised was provided by central banks and public sector institutions, which illustrates the quality of the investors.
Solid growth in green investments
The funds KBN raises by issuing green bonds are lent out to finance green projects undertaken by the Norwegian local government sector. The projects that have been financed by a green loan from KBN this year include new trams for Oslo, a shore-side power supply for Harstad port, and a biofuel plant in Øvre Romerike. In total, our green lending totals over NOK 30 billion across 300 green projects right across Norway, from the smallest municipality of Utsira with its 200 residents, to Oslo with its 700,000 residents.
In order to make opting to go green more reasonable, our green loans have a reduced interest rate. A range of projects, for example school buildings and nursing homes, have an economic life of around 30-40 years. Investment decisions taken today will accordingly be with us well into the low and zero-carbon age. We therefore want to help municipalities to make green choices.
KBN wants to help Norway’s local government sector to achieve its green transition. Borrowing from us gives the sector access to funding sourced from green investors from across the world.