Reykjavik Energy (OR: Orkuveita Reykjavikur) conducted a successful auction of Green Bonds on February 13th. The bond issue attracted bids amounting to ISK 6,258m with OR accepting bids totalling ISK 3,528m at a yield of 2.60%. The auction is the second Green Bond issue in Iceland, both of which were managed by Fossar Markets. The first auction was for the City of Reykjavik last December.
Process modelled according to international best practices
During the past years, Fossar Markets’ specialists have closely monitored international development in Green Bonds, especially within Scandinavia, amassing the knowledge and expertise required to implement this new investment option in the Icelandic market.
“Today, most issuers, and especially the Nordic ones, choose the Green Bond Principles (GBP) for their Green Bonds,” says Andri Guðmundsson, Managing Director of Fossar Markets’ Corporate Finance. GBP is a set of voluntary process guidelines introduced in 2014 by the International Capital Market Association (ICMA).
Anyone can issue Green Bonds
Guðmundsson says that Fossar is witnessing increased interest in Green Bonds from general investors as well as the participation of investors that specialise in green investment options. „Any issuer that invests in eco-friendly projects can issue Green Bonds, whether it be governments, municipalities or companies,” he adds.
Green bonds are “regular” bonds that are issued to fund projects that reduce greenhouse gas emissions and therefore counteract global warming and the associated negative impact. OR’s purpose with the auction is to finance an array of green projects within the company.
Issuers and investors have common interests
Both the City of Reykjavík’s and OR’s bond offering conform to ICMA’s Green Bond Principles and are independently reviewed by CICERO, the Center for International Climate Research. Approximately 100 issuers globally have chosen the GBP framework along with the CICERO second opinion review. The framework provides strict process guidelines whereby both issuers and investors benefit from reporting on green projects embarked upon.
OR’s new green bond series has a maturity of 36 years, pays a fixed real-interest rate and will be listed on the Nasdaq Iceland Sustainable Bond market. The series has a semi-annual annuity amortisation schedule and a final maturity on February 18th, 2055.