First ever Sustainability Hybrid Bond in the Nordics

Trianon, a real-estate company domiciled in Malmö has successfully issued SEK 400m Perpetual Hybrid Notes. The transaction marked the first ever Sustainability Hybrid Bond in the Nordics. Sustainability Hybrid Bond as such, net proceeds will be used according to Trianon’s Sustainability Bond Framework, containing both environmental and social projects and considerations.

 

The transaction marked the first ever Sustainability Hybrid Bond in the Nordics

The Sustainability Hybrid Bond is unique in the Nordic market as it not only details green assets but also very clearly specifies the relevant social assets.

For Trianon to be aligned with the Social Bond Principles and Green Bond Principles as issued by ICMA (International Capital Markets Association), their Sustainability Bond Framework needed to explicitly detail what constitutes a relevant social investment and to detail and specify which group of people, referred to as ‘target population’, that would explicitly stand to benefit from these investments.

At Trianon social investments are divided into three categories, with Affordable Housing being the main category followed by Employment Generation and Social Environment. Essentially these investments are apartment buildings, but what set these apart is that they must be located in geographical areas that are considered ‘socio-economically weak’.

“Many different factors may affect the socio-economic situation of any given area. Through a strong alignment between local stakeholders including the City of Malmö, the police, sport clubs, schools and other real estate companies, we have worked with key initiatives targeting areas within Malmö, identified as socio-economically weak. These areas highlight the particular group of people that Trianon work with, and which define the relevant ‘target population’ for social Eligible Projects under the Social Bond Principles”, Anna Heide, Trianon’s Head of Business Development explains.

 

“We are proud of having acted as Sole Bookrunner and Sole Sustainability Bond structurer in this transaction. Green bonds are on the rise and being part of the successful pricing of the first Hybrid Bond that combines both green and social commitments to society is something the full Nordea-team is proud of. This transaction is evidence of Nordea Debt Capital Market’s strive for valuable long-term customer relationships by providing leading expertise when raising new sustainable capital., commented Nordea’s Head of Sustainable Bonds, Jacob Michelsen.

The issue attracted strong investor demand resulting in a well oversubscribed book.

 

More on Social Bonds:

Social Bonds are use of proceeds bonds that raise funds for new and existing projects with positive social outcomes. The Social Bond Principles (SBP) updated as of June 2018 promote integrity in the Social Bond market through guidelines that recommend transparency, disclosure and reporting. They are intended for use by market participants and are designed to drive the provision of information needed to increase capital allocation to social projects

More on Green Bonds:

Green Bonds are debt instruments that allow investors to invest in sustainable projects while offering issuers affordable funding to finance these projects. The proceeds raised through the issuance of Green Bonds are used exclusively for projects that have a positive impact on the environment. Examples of green bond projects are those related to clean water, renewable energy, energy efficiency, river and habitat restoration, acquisition of land, or mitigation of climate change impacts. Many bond funds invest a portion of their capital to such causes, but green bond funds are those specifically invested in environmental initiatives. The definition of green projects is outlined in the Green Bond Principles, governed by ICMA (International Capital Markets Association).

 

 

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