Skip to main content
This webpage does not support Internet Explorer anymore. We recommend changing browser, to increase your online safety. Read more on Microsoft's webpages

KBN Funding Update – Summer Edition

KBN has reached the end of June 2022, raising approximately USD 5.2 billion equivalent ytd via its diversified funding programme. This equates to just under 60% of KBN’s estimated borrowing programme of USD 9 billion equivalent for 2022.

07.07.2022 / News

At the beginning of the year, KBN estimated a borrowing programme of approximately USD 10 billion for 2022. On the back of a strengthening USD throughout Q2, this has been revised lower to USD 9 billion equivalent for 2022.

The first half of the year has been engaging as market volatility resulting from rising inflation, Central Banks increasing interest rates, high energy prices and the War in Ukraine have affected markets. Despite this, KBN has had good access to funding markets throughout the first half of the year and maintained a robust liquidity position in the latter part of Q2, having very little requirement for additional financing in May and June.

Funding highlights for the first half of 2022 included two new USD Benchmarks, new 500 million 5-year benchmarks in the Kangaroo and Kauri markets, a new CHF 175 million 6-year benchmark and a SEK1.75bn 3-year Green Bond. KBN was also active in the USD FRN market, tapping its outstanding June 2026 SOFR FRN line by USD 800 million.

  • In January, KBN successfully priced a new USD 1.25 billion 5-year benchmark. The transaction enjoyed a strong reception from the outset, with orderbooks ultimately closing in excess of USD1.75 billion. Banks were the largest investor component taking 54.7% of final allocations, supplemented by strong participation from Central Banks & Official Institutions (43.2%).

    Read more about the benchmark (PDF)

  • In March, KBN successfully priced its second USD benchmark for 2022, a new USD 1.25 billion 2.5-year September 2024 Benchmark. The transaction experienced strong demand with books well diversified across 40 orders.  Distribution was dominated by Central Banks and Official Institutions with 72.9% of the final allocation.

    Read more about the benchmark (PDF)

Moody’s and Standard & Poor’s Ratings affirmed at Aaa/AAA (Stable/Stable)

Throughout May and June, both Moody’s and Standard & Poor’s affirmed KBN’s ratings at Aaa/AAA (Stable/Stable). Highlighted were KBN’s close link to the Central Government of Norway, the strong asset quality of the Norwegian Regional and Local Governments, KBN’s public policy mandate, strong and robust capital position and prudent risk management practices supporting strong liquidity buffers.

Moody’s Credit Opinion (PDF)
S&P Research Update (PDF)

Q1 Results

KBN’s net interest income in the first quarter of 2022 was NOK 436 million as compared to NOK 384 million in the same period in 2021. KBN’s result for the period in the first quarter of 2022 was a loss of NOK 352 million as compared to a profit of NOK 398 million in the first quarter of 2021. The decline in KBN’s result, is caused by unrealised losses on financial instruments, as a result of market volatility.

The market conditions have been demanding, but we are satisfied with higher net interest income. Net interest income led to a solid result in KBN’s core earnings. KBN’s unrealised gains and losses are expected to reverse, either as market conditions normalise or as the instruments approach maturity, says CEO Jannicke Trumpy Granquist.

KBN continued to experience a good level of growth in its green lending, and its portfolio of green loans increased by NOK 1.6 billion in the quarter, which is more than double the increase of NOK 0.6 billion seen in the first quarter of 2021. The projects financed by a green loan from KBN in the first quarter of 2022 include a new school, sports and swimming complex in Lørenskog municipality, a recycling centre in Drammen and a shore-side power system for Nordfjord port.

Read more about Q1 Results

Funding Forecast

As loan demand from the Municipal sector is expected to pick up going into the Autumn, KBN will continue to actively look for funding opportunities. In addition to USD benchmark issuance, KBN monitors smaller public markets and will look to remain active in the Australian Dollar, Canadian Dollar, New Zealand Dollar, Sterling and Swedish Krona markets throughout the remainder of the year. KBN expects to raise approximately USD 4 billion equivalent for the remainder of the year.

Regarding KBN’s benchmark programme, KBN foresees another 1-2 USD denominated benchmark transactions during 2022, with a maturity focus of 2-5 years. KBN also plans to be active in the public Green Bond market and will assess opportunities in various markets and tenors. KBN will evaluate both Taps on existing Green bonds, as well as new Green bond issuance.

The KBN Funding team