KBN close to completing it's annual funding target
Throughout the Autumn, despite some market volatility KBN continued to have very good access to institutional markets, with a focus on shorter maturities in the AUD, NZD, GBP and US dollar markets.
Funding highlights included a successful new 3-year USD 1.5bn October 2021 Benchmark, an inaugural AUD 450m September 2023 Green Bond and a new GBP 250m December 2023 line. KBN was also active in tapping outstanding lines in other institutional markets. KBN tapped it’s April 2021 and May 2021 FRN lines in Australia and New Zealand and the December 2020 and November 2022 lines in the GBP market. In addition, KBN also tapped its outstanding March 2020, June 2020, March 2021 and September 2021 FRN lines to meet investor demand.
As of 31 October, KBN has raised approximately USD 12.7 billion equivalent, via 102 individual trades across 14 different currencies.
KBN 2018 Q3 RESULTS:
STRONG GREEN LENDING GROWTH AND SATISFACTORY MARGINS
KBN’s net interest income in Q3 2018 was NOK 419 million, compared to NOK 513 million in the same period in 2017. As projected, KBN’s margins have decreased in 2018 in line with developments in the market and KBN’s target of providing financing on favourable terms.
At the end of Q3, KBN had a common equity Tier 1 capital adequacy ratio of 17.2% and a leverage ratio of 3.9%.
FIRST KANGAROO GREEN BOND
In September KBN's first Green bond issuance of 2018 was carried out in the Australian dollar market. The transaction represented KBN’s inaugural Green bond transaction in the AUD market and is the first Kangaroo Green Bond from an agency issuer since March 2015.
The benchmark was upsized to AUD450m from the initial AUD250m minimum deal size, marking KBN’s largest AUD transaction since they began issuing in the market 17 years ago.
Read more about the kangaroo green bond here
FORTH USD BENCHMARK FOR 2018
KBN issued its fourth USD benchmark transaction for the year on Thursday, October 11th. The transaction with a maturity of three years raised USD 1.5 billion and was very well received despite a volatile market backdrop.
The bond is maturing 18th October 2021, pays a semi-annual coupon of 3.125% and has an issue price of 99.932%. It gives a spread of 19.5 basis points over the 2.875% US Treasury due October 2021 and a spread of +3 basis points to mid-swaps. For a three year KBN Benchmark, this is the lowest level achieved against both swaps and US Treasuries in the last 10 years.
KBN’s funding programme has progressed well in 2018 and it is expected there will be limited requirements for Q4. Remaining funding will likely be raised through a combination of institutional trades, private placements and issuance in retail markets.
For 2019 the KBN funding programme is expected to be USD 12bn-14bn.
The KBN Funding Team