MuniFin leads the way by issuing the first Nordic SSA Social Bond

On 3 September 2020, MuniFin (Municipality Finance Plc) issued its inaugural social bond. The EUR 500 million bond is the first Nordic and Finnish Social bond issued in the SSA category. The benchmark was almost four times oversubscribed in just 2.5 hours, which is a testimony of increasing investor interest in the sustainability area. The bond will be listed on the Sustainable Debt Market at Nasdaq Helsinki.

Last week MuniFin mandated BNP Paribas, Credit Agricole CIB, DZ Bank and SEB to organise investor calls for the upcoming inaugural Social Bond. After series of investor calls and positive feedback from investor community, MuniFin opened books for the inaugural Social bond on Thursday 3rd of September. The 15-year EUR 500 million social bond pays an annual coupon of 0.05% with a yield of 0.068%.

– The work the MuniFin team have done has built on their strong reputation in the ESG space and has been rewarded with a huge following from sustainable investors and excellent execution. This framework and transaction sets the benchmark for other Nordic institutions to follow, comments Robert Matthews from BNP Paribas.

More than 91% of the bond was distributed to European investors. Almost one third of the bond was allocated to Germany, Austria and Switzerland and nearly one fifth to Nordic coutries. Asset managers took the largest share by representing almost half of the investors, with significant demand from SRI investors.

– The terrific invest interest did not come as a surprise for us as we see more and more investors wanting to invest in projects that support sustainable development. In 2016, we were the first green bond issuer in Finland. After being an active green bond issuer for a few years, it was time to expand the sustainable product offering to our clients and introduce social bonds to our investors. Considering our customer base of municipal and social housing sectors, expanding the sustainable product offering was a natural step for us, says Esa Kallio, the President and CEO of MuniFin.

MuniFin is a wholly public sector owned company whose sole mandate is to secure financing to the Finnish municipalities and non-profit housing organisations. It has been an active green bond issuer for four years and it is now expanding the offering into social bonds.

MuniFin’s inaugural social bond is the first of its kind issued by an SSA (Sovereigns, Suprana-tionals, Agencies) issuer in the Nordic countries.

Making the impact visible

MuniFin’s Social Bonds Framework has been drafted in accordance with the ICMA Social Bond Principles and it has three main categories: social housing, welfare and education. The Second Opinion has been provided by ISS ESG, stating that the Framework significantly contributes to four of UN’s Sustainable Development Goals.

With its new social finance product launched in the spring 2020, MuniFin aims to encourage investments that have a notably strong impact and bring about wide-ranging social benefits.

With the introduction of the social finance product, MuniFin wishes to showcase projects that are in line with the company’s view of social finance. The first financed projects include schools, hospitals and healthcare centres, and housing for people with special needs.

– Although the finance we provide can be considered already quite social in nature, we wanted to find projects that ultimately benefit the vulnerable population and address some key social challenges such as social exclusion and inequality, but also further promote Finland’s welfare state and education system, which are among the best in the world, says Antti Kontio, the Head of Funding at MuniFin.

The social finance projects are approved by the Social Evaluation Team. The team consists of external and internal social impact experts.

Issuer:Municipality Finance Plc (MuniFin)
Rating:Aa1 / AA+ (Moody’s/S&P – both stable)
Issue size:EUR 500mn (no-grow)
Payment date:10th September 2020 (T+5)
Maturity date:10th September 2035
Coupon:0.05%
Re-offer price:99.731%
Re-offer yield:0.068%
Re-offer vs. mid swaps:+9bps
Re-offer vs. benchmark:DBR 0% 05/15/35 + 33.6bps
Lead managers:BNP Paribas / Credit Agricole CIB / DZ BANK / SEB

Further information

Esa Kallio
President and CEO
Tel. +358 50 337 7953

Antti Kontio
Head of Funding
Tel. +358 50 3700 285