Reykjavik Social Housing (RSH, Felagsbustadir) has successfully issued the first social bonds in Iceland. The bonds were sold in a private placement transaction and the issue was sized at ISK 6.400 million nominal value at a yield of 1,90%. The new social bond series, FB100366 SB, has a maturity of 47 years, pays a fixed real-interest rate and will be listed on the Nasdaq Iceland Sustainable Bond market. The bond is guaranteed by the City of Reykjavik. The issue proceeds will be used to support further investments in rental housing as RSH aims to increase their current apartment portofolio by at least 500 units by 2022.
Social Bonds are bonds which are issued to finance specific projects which have positive social impact. One of the primary drivers of such issues is increasing investor demand for socially reponsible investment options.
Earlier this year, RSH published a social bond framework, Reykjavik Social Housing Social Bond Framework, which conforms to the social bond principles published by ICMA, the International Capital Market Association. The framework has received a second opinion from Sustainalytics, a global leader in ESG research and ratings. The second-party opinion states that Sustainalytics considers RSH‘s social framework „robust, credible and transparent, and in alignment with the four core components of the ICMA’s Social Bond Principles 2018“.
Alignment with UN Social Development Goals
Reykjavik Social Housing is a non-profit company owned by the City of Reykjavik whose sole purpose is to provide public benefits through affordable social housing. RSH is Iceland’s largest provider of affordable social housing and the largest housing leasing company in Iceland. At year-end 2018, RSH‘s housing portfolio totalled 2.654 units, an increase of 400 units from 2014.
The availability of stable and affordable housing is a basic human right and is of key importance to the economic vitality of communities, underpinning good health and the social, educational and economic participation of individuals. In a UN report on SDG sustainable development published in Iceland in 2018, increase of affordable rental housing was one of the key projects identified locally. Social housing provides secure and affordable housing not available in the private market, striving to ensure that all individuals and families have access to safe and affordable homes, regardless of social or economic status.
The City of Reykjavík’s policy is that 5% of all residential housing in Reykjavík is affordable social housing. The residents of Reykjavík, which account for approximately 36% of the total Icelandic population, generally use a higher proportion of their salaries to pay for housing than elsewhere in Iceland, stressing the need for the availability of affordable social housing.
Fossar Markets managed the social bond issuance on behalf of RSH and handled investor relations. Circular Solutions adivised on the social bond framework and Lagahvoll provided legal advise.
For further information, please contact:
Tel: +354 520 1500
MD Corporate Finance, Fossar Markets
Tel: +46 72 567 6666