Strong Q1 Funding Performance
KBN again expects to see stable, but solid growth in its lending business for the year ahead. Strong growth in green lending is also expected to continue, and for 2018 lending to climate and environmental projects represented a sizeable 36% of the year’s overall lending growth. KBN expects lending growth for 2019 to be around 5%.
Conducive funding markets throughout Q1, enabled KBN to issue across a variety of public markets. Highlights in the USD market included a successful USD 1.25bn 5-year February 2024 Benchmark and a new USD 750mn April 2021 FRN (subsequently tapped). In the Kangaroo market, KBN was active in the mid-curve, twice tapping the outstanding April 2023 bond for a total of AUD 700mn. In GBP, KBN issued a new GBP 250mn December 2021 bond and also tapped its outstanding December 2023 line by GBP 100mn. Complementing this activity in the USD, AUD and GBP public markets, KBN also issued a new 3-year SEK 1.0bn March 2022 bond.
KBN 2018 Annual Report – High Demand for Loans in Demanding Market Conditions
In 2018, KBN granted 661 new loans totalling NOK 55.7 billion. These loans financed investment in projects such as schools, health and care facilities, water and wastewater systems and adaptations to climate change. The total lending portfolio grew by 7.3% in 2018, as compared to growth of 5.7% in 2017.
“The long-term work KBN has undertaken in relation to investors, customers and political decision-makers helped make 2018 the strongest year in KBN’s history in terms of growth in its green lending. This success reflects the greater level of awareness and higher environmental ambitions of our customers. KBN is proud to be able to contribute to its customers succeeding in making the transition to a low-carbon society”, commented CEO Kristine Falkgård.
KBN releases Environmental Impact Report 2018
In parallel with the release of KBN’s annual report, KBN also launched its Environmental Impact Report 2018.
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 2018. Per 31 December 2018, KBN had acquired USD 1.48 billion equivalent through green bond funding and has a portfolio of green loans of USD 2.16 billion equivalent.
KBN’s impact reporting in conducted according to the principles and methodology presented in the Position Paper on Green Bonds Impact Reporting developed by a group of Nordic public sector green bond issuers, including KBN. Developed with the primary aim of assisting Nordic public sector borrowers, the signatories hope that it will prove useful also for issuers from the private sector and from other countries as well as for the investor community.
As loan demand from the Municipal sector is expected to remain stable in Q2 2019, 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 2019 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