KBN Quartely Funding Update
Throughout Q2, KBN continued to see solid global demand as investors sought exposure to KBN and Norway, given the country’s stable political environment and solid fiscal position. KBN is 100% owned by the Kingdom of Norway and as a result, is seen as the best proxy for the Kingdom in international debt markets.
KBN expects the local government sector to continue to have sizable investment needs going forward and for 2019, lending growth is expected to be around 5%.
Despite being active in some markets, funding activity was relatively limited throughout Q2 as a weaker Norwegian Krone (NOK) than forecast, has led KBN to lower its expected 2019 Funding Programme from USD 12-14bn to USD 10-12bn equivalent.
In USD, KBN issued one new Benchmark, a successful USD 1.5bn 5-year deal in June. In the NOK market, KBN issued a NOK 700mn tap to its existing 2022 line and opened a new 10.5-year AUD bond in the Kangaroo market. Otherwise, KBN was active in the Private Placement market across a variety of currencies, issuing approximately SEK 4.4bn over various tenors as well as being active in NZD and ZAR.
KBN’s net interest income in the first quarter of 2019 was NOK 458 million as compared to NOK 495 million in the same period in 2018. KBN's lending portfolio grew by 1.2% in the first three months of the year, compared to growth of 0.4% in the same period in 2018. NOK 663 million was disbursed in new, green loans.
Moody’s and Standard & Poor’s Ratings affirmed at Aaa/AAA (Stable/Stable).
Throughout June, both Moody’s and Standard & Poor’s affirmed KBN’s ratings at Aaa/AAA (Stable/Stable). Highlighted were KBN’s close link to the Government of Norway, strong asset quality, KBN’s public policy mandate, solid capital base and prudent risk management practices.
Read the Moody’s Credit Opinion here
Read the S&P Research Update here
KBN wants to help put sustainability on the agenda both in Norway and internationally. We are actively involved in developments in the area thanks to the range of external appointments held by our employees, which include a member of Finance Norway’s Sustainability Group and a member of the Norwegian Climate Foundation’s Council.
As loan demand from the Municipal sector is expected to remain solid in Q3, 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.
Regarding KBN’s benchmark programme, KBN foresees another benchmark transaction during 2019 (in either USD or EUR) with a maturity focus of 5-10 years. KBN also plans to re-enter the public Green Bond market during the year and will assess opportunities in various currencies and tenors.
The KBN Funding Team