New bond issue

On Tuesday 20 March 2018 KBN issued its second USD-denominated benchmark bond of the year. The bond raised USD 1.25 billion with a maturity of two years.

“There was a lot of interest in the bond. The orderbook reached USD 1.7 billion, and more than 45 investors subscribed to the issue, including a range of central banks from around the world”, explains Thomas Møller, Head of Funding at KBN. The bond was priced at three-month Libor minus 1 basis point.

The funds raised will be lent out to finance projects of all sizes undertaken by the Norwegian local government sector in order to ensure that municipalities provide their residents with all the welfare services for which local government is responsible.

“The fact that KBN enjoys good access to funding on favourable terms is important to our ability to continue to provide municipal Norway with low-cost financing”, explains Thomas Møller.

About the bond

The bond raised USD 1.25 billion with a maturity of two years (maturity date of 17 April 2020) and a coupon of 2.5%. 73% of investors in the bond are central banks and public-sector institutions. With regard to the geographic distribution of investors, 49% are from Europe, with North and Latin America together accounting for a further 34%. 

BMO Capital Markets, Citi and TD Securities assisted KBN with the process.

KBN has picked a great window to price their tightest USD benchmark since 2013. With a heavily oversubscribed deal and a very high-quality orderbook this trade has all the hallmarks of a classic KBN deal”, comments Laura Quinn, TD Securities, in a press release issued by TD Securities.

About KBN

KBN’s 2018 funding requirements are equivalent to between USD 12 billion and USD 14 billion. These funds will be lent out to the Norwegian local government sector, and will be used to build schools, nurseries, hospitals, senior citizen centres, roads and waste disposal plants, for example. KBN has the highest possible credit rating of Aaa/AAA.

Click here to read the full press release