MuniFin goes green again – with exceptionally strong investor demand

Municipality Finance plc (MuniFin) issued a new 10-year EUR 500 million Green bond on Wednesday 3 July 2019. The new benchmark offers a 0.05% coupon and a spread of -8 basis points through mid-swaps. The transaction was jointly led by Crédit Agricole CIB, HSBC, Nordea and Rabobank.

The mandate of a new 10-year Green bond was announced in the afternoon on Monday 1 July. On Tuesday 2 July MuniFin arranged a Global Investor Call and books for the benchmark were opened on Wednesday morning, 3 July at mid-swaps -5 area. Investor demand was exceptionally strong from the outset and the book grew quickly. Just over an hour after announcement (10.10 CET), the guidance was revised directly to -7 bps area, with orders over EUR 1.2 billion. Books closed at 11.00 CET at mid-swaps -8 basis points. The final order book was over EUR 2 billion. Close to 90 accounts participated in the transaction.

The order book was dominated by investors from Europe, accounting for 81% of the transaction. Asia presented 12%, North America 6% and the Middle East 1%. Central Banks & Official Institutions represented the largest share of allocations (34%), closely followed by Banks (30%), Insurance Companies & Pension Funds (20%), Asset managers (15%) and Others (1%).

The transaction is MuniFin’s second EUR-denominated Green bond, having issued a USD Green bond in 2016 as well as a EUR and AUD Green bond in 2017. With this transaction MuniFin has issued approximately EUR 1.5 billion equivalent in Green bond format.

“We started our green journey more than three years ago and this is our fourth Green bond issued so far. We are very pleased to see that investors are comfortable with our credit and the green story. The investor base in our Green bonds is much broader than in our conventional benchmarks, which also reduces execution risk. Pricing through our existing EUR benchmark curve shows that investors are thirsty for Green bonds”, says Antti Kontio, Head of Funding and CSR at MuniFin.

“MuniFin won Environmental Finance’s Green Bond Issuer of the Year (SSA) Award for its inaugural Euro-denominated Green Bond transaction, and MuniFin’s second EUR Green Bond has echoed the success of the first. It was a phenomenal success; in terms of oversubscription, both high-quality and sustainability focused investor participation, and pricing outcome seen at negative 2 bps new issue premium, despite a challenging low-yield environment. The outstanding result is a testament to MuniFin’s dedication to the Green Bond market and its marketing efforts and excellent relationship with the Green Bond investor community”, says Kamal Grossard-Amin, Head of SSA DCM at Nordea.

Details of the transaction:

EUR 500 million 0.05% Green Benchmark due 6 September 2029

Issuer: Municipality Finance PLC (Kuntarahoitus Oyj)
Rating:Aa1/AA+ (Stable/Stable)
Issuer Size:EUR 500m
Payment Date:10 July 2019
Maturity Date:6 September 2029
Coupon:0.05% Fixed, Annual, Act/Act, ICMA, Short first
Re-offer Price:99.970%
Re-offer Yield:0.053%
Re-offer vs Mid Swaps:       -8 bps
Re-offer vs Benchmark:    +43.8 bps over DBR 0.25% due Feb-29
Lead Managers:   Crédit Agricole CIB, HSBC, Nordea, Rabobank

More information

Antti Kontio, Head of Funding and CSR, tel. +358 9 6803 5634

Joakim Holmström, Head of Capital Markets, tel. +358 9 6803 5674