KBN’s 2017 funding breakdown
KBN’s 2017 funding breakdown
On the back of solid lending growth throughout 2017, KBN’s funding programme came in at the higher end of forecasts. KBN raised USD 14 billion in 2017 completing three successful USD benchmark transactions with maturities ranging from 2-5 years. Continuing with KBNs strategy of building it’s Euro curve, KBN issued it’s second 10-year EUR benchmark and third EUR benchmark since opening the Euro Programme in 2014. As with USD, the EUR benchmark programme is expected to remain a key benchmark market for KBN going into 2018.
As with previous years, KBN was again active in Institutional markets, accessing the USD FRN market, the Kangaroo market and the GBP and NZD markets regularly.
KBN issued five USD FRN TAPs during 2017, raising over USD2bn on the outstanding March 2020, June 2020 and September 2021 lines. In addition, KBN also had a very successful year in the AUD market. KBN printed over AUD1.1bn from maturities ranging from 2024 – 2032. In the Sterling market, KBN printed its first GBP line since 2014, with a new GBP 250m December 2020 line. KBN hopes to be more active in this market going forward, with the aim of again building its curve out in this currency.
Overall, KBN’s total funding programme for was fairly balanced between Benchmark funding 33%, Institutional niche markets (28%) and the Uridashi market 31%. Private Placements and domestic issuance in Norway made up the remainder of KBN’s funding programme.
From an investor perspective, KBN continues to gain traction with investors world wide. Of all funding completed for 2017, 25% went to investors in Europe, 21% to investors in the US/Americas and 36% to Japan. Asian investors (ex Japan) accounted for 10% and the remaining went to investors domiciled in the Middle East/Africa 3%, Norway 3% and Australia and New Zealand 2%.
In terms of the structure of KBN’s funding for 2017, Fixed Rate and FRNs made up 65% of the funding completed, Equity Linked 17%, FX Linked 12% and Zero Callable notes composed 6% of the completed funding programme.
A Very Green Q4
During Q4, KBN issued its first domestic syndicated NOK Green Bond, issuing a dual-tranche 10 and 15-year Green Bond, again demonstrating KBN’s strong commitment to the Green Bond market.
KBN mandated SEB and Nordea Markets to lead manage the deal, which also involved a local investor roadshow in Oslo and Bergen. On the back of this and with a supportive market backdrop, KBN issued NOK 1.35bn over the two-tranche deal. This was KBN’s inaugural NOK Green Bond, coming on the back of three previous USD issues dating back to 2013. The Bond Proceeds are reserved for financing climate friendly projects according to KBN’s Green Bond framework.
Other KBN Green activities
During the quarter, KBN also participated in various Green Bond forums both internationally and domestically discussing Green Bond Impact Reporting.
On the 24th October, KBN as one of a group of ten Nordic public sector issuers, released a joint position paper on green bonds impact reporting at the OECD Green Investment Financing Forum in Paris. After 14 months in the making, the paper was developed with the primary aim of assisting Nordic public sector borrowers, but the signatories hope that it will prove useful also for issuers from the private sector and from other countries, as well as being useful for the investor community.
Closer to home on the 20th November, KBN and SEB organised a seminar on green finance and environmental impact reporting at Oslo’s Kulturhuset. The event was very well attended discussed issues such as how you calculate climate risk and the environmental impact of an investment.
Q3 RESULTS RELEASED
Q3 2017 figures released during Q4 show that KBN achieved solid results with net interest income in the third quarter coming in at NOK 513 million. “We are very satisfied with KBN’s earnings for the period, as well as with our stable operational performance”, comments Kristine Falkgård, President and CEO of KBN. KBN’s result after tax for the third quarter of 2017 was a profit of NOK 272 million, compared to a profit of NOK 198 million in the same quarter in 2016.
FUTURE PROSPECTS AND FUNDING FORECAST
KBN is targeting a borrowing programme of USD 12-14 billion for 2018.
Lending growth in 2018 is expected to remain similar, or slightly higher than was achieved in 2017. KBN continues to give priority to loans with longer maturities as it manages its capital position, crucial in KBN’s ability to be a long-term partner to the Norwegian local government sector.
KBN will actively look to raise its funding across its four key funding markets. Benchmarks, both in USD and EUR, Institutional niche markets (such as the AUD, NOK, GBP, NZD), private placements and retail markets.
In the Benchmark market, KBN plans to issue three/four transactions throughout 2018.
Also, KBN has been contemplating some structural changes in our funding programme for some time. A decision has now been made, effective from 1 February 2018, KBN will be limiting the structures it offers both institutional and retail investors to more plain vanilla, fixed and floating rate products. This shift in strategy is a decision made by KBN to simplify its product offerings. If you would like any further information, please do not hesitate to contact the KBN Funding Team.
Finally, the KBN Funding Team wishes you the best for the start of 2018 and a prosperous year ahead.
The KBN Funding Team