Strong Q1 funding performance
KBN again expects to experience stable but solid growth in its lending business for the year ahead. Population growth, climate change, demographic changes and the continual need to upgrade and modernise facilities and services mean that KBN expects the level of investment and the need for long-term borrowing to remain high. KBN expects the local government sector to continue to have sizable investment needs going forward and for 2018, lending growth is expected to be around 6.5%.
Two new USD benchmarks
Funding highlights were spread over a good variety of different markets and currencies throughout Q1. In USD, KBN issued two new Benchmarks, an USD 1.5bn 5-year deal in January and an USD 1.25bn 2-year trade in March. These Benchmarks were complimented by the issue of a new 3-year USD 700m FRN and subsequent USD 500m Tap.
In the Kangaroo market, KBN issued its first mid-curve trade since 2015, completing an AUD 300m Tap of its outstanding April 2023 bond. In addition, KBN issued a new 2028 line during Q1 and after subsequent taps of this bond, the current outstanding is AUD 505m.
ENVIRONMENTAL IMPACT REPORT AND CSR REPORT 2017
In parallel with the release of KBN’s annual report, KBN also launched its Corporate Social Responsibility Report and its second Environmental Impact Report. These reports give investors and others detailed insight into our work on corporate social responsibility and sustainability, and show how the money that KBN borrows to finance environmentally friendly projects by issuing bonds (green bonds) finds its way into specific projects in the Norwegian local government sector.
The objective of the environmental impact report is to promote transparency and integrity in regard to the impact of the Norwegian local government projects financed under KBN’s Green Bonds Framework by the end of 2017. Per 31 December 2017, KBN had acquired USD 1.17 billion through green bond funding and has a portfolio of green loans of USD 1.4 billion.
As loan demand from the Municipal sector is expected to remain solid in Q2, KBN will continue its funding activity looking for opportunities in the public markets in general, while keeping focus on the private placement and retail markets.
With regard to KBN’s benchmark programme, KBN foresees another 2 benchmark transactions during 2018 with a maturity focus of 3-10 years. These will be focused in either EUR or USD and the current expectation is that KBN will next look to access the market during Q2. KBN also plans to re-enter the public Green Bond market during the year.
The KBN Funding Team