MuniFin’s second USD benchmark of the year attracted high-quality investors

Three months following the record-breaking USD 1.5 billion issuance in January, MuniFin returns to the USD market with another 1 billion benchmark. The 3-year bond successfully gathered a high-quality orderbook.

On Tuesday 16 April, MuniFin issued a new 3-year USD 1 billion benchmark with initial price guidance of MS+33 basis points. Investor demand continued to grow throughout the morning and books closed a few hours later in excess of USD 1.5 billion.

The bond was priced at MS +33 basis points, consistent with the initial guidance, with a coupon of 4.875%, a reoffer price of 99.708% and a re-offer yield of 4.981%. It carries a spread of 18 basis points over the CT 3 4.500% due 15 April 2027.

The final orderbook was geographically diverse with 48 high-quality accounts participating. Central banks took 57% of the allocations, followed by Banks and bank treasuries (40%), and Asset Managers, taking the remaining 3%.

“Investor demand started to accumulate after a moderate start, eventually reaching over USD 1.5 billion. We were particularly pleased with the quality of the final orderbook, as majority was allocated to central banks and official institutions. We have now successfully secured a little less than half of our funding target for the year”, says Analyst Aaro Koski.

After this transaction, MuniFin has now completed EUR 4.5 billion of its EUR 9–10 billion funding programme for 2024.

Photo of Aaro Koski
Aaro Koski, Analyst at MuniFin’s Funding and Sustainability team.

Distribution

Transaction details

Issuer:Municipality Finance Plc (“MuniFin”)
Rating:Aa1 / AA+ (Moody’s/S&P – both stable)
Issue Size:USD 1 billion
Payment Date:23 April 2024 (T+5)
Maturity Date:23 April 2027
Coupon:4.875%
Re-offer Price:99.667%
Re-offer Yield:4.996%
Re-offer vs. Mid Swaps:+33bps
Re-offer vs. Benchmark:CT 3 4.500% due 15 April 2027 +18bps
ISIN:XS2807531657 / US62630CEL19
Lead ManagersJ.P. Morgan SE, Morgan Stanley Co & International PLC, Nomura Financial Products Europe GmbH, TD Global Finance unlimited company

Comments from Lead Managers

Ben Adubi, Managing Director, Head of SSA, Morgan Stanley:

“Another successful outing in the USD market for MuniFin following their strong 5-year issued earlier this year. Taking advantage of the favourable move in swap spreads and recent sell-off in rates, the deal amassed a high-quality and granular orderbook with 57% of allocations to CB/OIs, which is a testament to the strength of MuniFin’s credit quality and their opportunistic funding strategy. Congratulations to the MuniFin team on a stellar start to Q2, following on from an impressive start to the year, Morgan Stanley is delighted to have been involved!”

Mark Yeomans, Managing Director, Nomura:

“Yet another strong USD outing from MuniFin; with the new 3-year benchmark complementing the 5-year issued earlier in January. MuniFin took advantage of the global back up in rates to deliver another record 4.875% coupon for investors, as witnessed in their previous 3-year from last October. The quality of the orderbook is a testament to the investor following that MuniFin enjoys as a safe haven asset and the diligent investor outreach of the entire funding team. Nomura were delighted to be a part of such an important transaction.”

Ioannis Rallis, Executive Director, Head of SSA DCM, J.P. Morgan:

“Congratulations to the MuniFin team for printing another solid USD benchmark this year! Despite uncertain geopolitical backdrop and busy pipeline in the week, MuniFin was successfully able to achieve its tightest spread vs SOFR MS (+33bps) for a MuniFin USD 3-year benchmark. The high quality of the orderbook reflected in the 57% allocation to CB/OIs is a testament to investor confidence in MuniFin’s name. We are delighted to be involved in this transaction.”

Laura Quinn, Managing Director, Global Co-Head of SSA and Head of Dublin Debt Capital Markets:

“Congratulations to the MuniFin team on a successful USD benchmark transaction, launching their first 3-year USD benchmark in 2024 and second USD benchmark this year. MuniFin secured an efficient funding window this week to ensure they could complete their USD 1 billion funding exercise.  The exceptionally high-quality orderbook is a testament to MuniFin’s standing in the fixed income market.”

Read more

MuniFin’s USD 1.5 billion benchmark faced phenomenal demand 

Further information

Joakim Holmström
Executive Vice President, Capital Markets and Sustainability
+358 50 4443 638

Antti Kontio
Head of Funding and Sustainability
+358 50 3700 285

Karoliina Kajova
Senior Manager, Funding
+358 50 5767 707

Lari Toppinen
Senior Analyst, Funding
+358 50 4079 300

Aaro Koski
Analyst, Funding
+358 45 1387 465

MuniFin’s role as a trusted financing partner has grown even more important – 2023 annual report and sustainable finance impact reports published

We have published our annual report for 2023. We have also published the impact reports on our green and social finance and the Pillar III disclosure report on capital adequacy.

The year 2023 was the fourth consecutive year marked by instability. In these uncertain times, our role as our customers’ trusted financing partner has grown even more important. At MuniFin, 2023 was a year when we put sustainability even more front and centre as we revised our strategy and published our first sustainability agenda.

The volatile operating environment did not significantly affect our performance. Our operations remained stable, and we were again able to successfully carry out our core mandate of providing affordable long-term financing for our customers.

Our long-term customer finance increased by about 10% from the previous year. Our new long-term customer financing remained on a par with 2022, totalling EUR 4.4 billion. Our profitability was slightly higher than in 2022.

The amount of our sustainable finance, i.e. our green and social finance, grew by about EUR 2 billion in 2023. Our sustainable finance products are our way of encouraging our customers to make more responsible investments. Read more about the impacts of our sustainable finance in the green and social impact reports published today.

What was the year 2023 like at MuniFin?

MuniFin Annual Report 2023

MuniFin Green Impact Report 2023

MuniFin Social Impact Report 2023

MuniFin Pillar III Disclosure Report 2023

MuniFin returned to the Sterling market with its first GBP deal of the year

MuniFin’s GBP 250 million issue on February 29 was well received in the market, with particularly strong participation from central banks and official institutions. With this transaction, MuniFin has now printed one third of its EUR 9–10 billion funding programme for the year 2024.

Distribution of the transaction was once again broad both in terms of investor types and geographics, which is testament to MuniFin’s strong position in the global investor community. 

Central banks and official institutions were the largest investor component, taking 59% of the final book. The participation was also strong from banks and bank treasuries (39%), with fund managers, pension funds and insurance accounts representing 2%. In terms of geography, the transaction was broadly diversified across UK (41%), Asia (34%) and EMEA ex. UK (25%) investors.

“This was our first GBP line of the year, and it was great to extend our GBP issuance curve today. We are grateful for the investor following we have in the Sterling market and it has been a pleasure to be able to be on the screens again”, says Senior Manager Karoliina Kajova from MuniFin’s funding and sustainability team.

Press release from bookrunners

Issuer:Municipality Finance Plc (“Munifin”)
Ratings:Aa1 / AA+ (both Stable) by Moody’s / S&P
Format:Senior, Unsecured, Reg S, Registered
Coupon:4.375% Fixed, Annual, ACT/ACT ICMA, short first
Size:GBP250 million
Pricing Date:29th February 2024
Payment Date:7th March 2024 (T+5)
Maturity Date:2nd October 2028
Reoffer Spread:SONIA MS + 30 bps | UKT Oct-28 + 29.6bps
Joint Bookrunners:J.P. Morgan, RBC Capital Markets, TD Securities

Comments from bookrunners

“Congratulations to the MuniFin team for a strong return to the GBP market, taking advantage of a clear issuance window to extend their GBP curve with a new benchmark. The strong support from a diverse group of investors and the competitive price point is a testament to MuniFin’s standing in the international market. We’re delighted to be involved!”
Tina Nguyen, Vice President, SSA DCM, J.P. Morgan

Congratulations to the MuniFin team on the new GBP Oct-28 Benchmark. Taking advantage of a clear issuance window, MuniFin were able to extend their GBP Benchmark curve and maintain their regular presence in the Sterling SSA market. RBC were delighted to be a part of the transaction.”
James Taunton, Director, SSA DCM, RBC Capital Markets

We are delighted to be involved in MuniFin’s successful return to the Sterling market with their first GBP Benchmark of the year. This syndication is a clear demonstration of their global support from a diversified investor base. Congratulations to the MuniFin team on an excellent trade.
Paul Eustace, Managing Director, Global Co-Head of SSA and Head of Europe and Asia Syndicate, TD Securities

Further information

Joakim Holmström
Executive Vice President, Capital Markets and Sustainability
+358 50 4443 638

Antti Kontio
Head of Funding and Sustainability
+358 50 3700 285

Karoliina Kajova
Senior Manager, Funding
+358 50 5767 707

Lari Toppinen
Senior Analyst, Funding
+358 50 4079 300

Aaro Koski
Analyst, Funding
+358 45 1387 465

MuniFin debuted successfully in the NOK social bond market

MuniFin’s inaugural NOK social bond was issued on 13 February. Despite ample supply from SSA issuers in the NOK market, the demand for the NOK 2 billion issue was strong, with a high quality investor base.

The issue marked both MuniFin’s first ESG labelled bond and the first NOK trade this year. The books built very quickly and were closed at a spread of +25 bps over 3-month Nibor.

“Over the past years, MuniFin has established themselves as a frequent issuer in the Nordic market, popular amongst a wide array of investors. The new issue marks the first social bond issued by MuniFin in Norway and the label was a significant contributor to the great investor demand”, says Hedda Giæver, Head of IG International, DBN Bank ASA.

The strong investor base showcased significant interest from bank treasuries, as well as domestic and foreign real money, including pension insurance and asset managers.

80% of the issue was allocated to Norwegian investors.

“We are extremely happy to have been able to return to the Norwegian Krona market. What’s even more pleasing is to be able to do it with a social bond. It is in the very core of our Sustainability Agenda to provide financing to social projects and increase their share in our lending portfolio. We are ever grateful for the support from our investors”, says Aaro Koski, MuniFin’s Funding Analyst.

Transaction details

Issuer:Municipality Finance (KUNTA, MuniFin)
Issue Rating:Aa1/AA+
Status:Senior unsecured
Reoffer Price:99.631% / 4.083%
Reoffer Spread:3mN+25bps
Issue Size:NOK 2bn
Settlement:20 February 2024
Maturity:20 February 2029
Coupon:4% Fixed, Annual, Act/Act Icma Unadjusted Following
Listing:Nasdaq Helsinki
ISIN:XS2769883955
Lead Manager:DNB Markets

Further information

Joakim Holmström, Executive Vice President, Capital Markets and Sustainability, +358 50 4443 638  
Antti Kontio, Head of Funding and Sustainability, +358 50 3700 285 
Karoliina Kajova, Senior Manager, Funding, +358 50 5767 707 
Lari Toppinen, Senior Analyst, Funding, +358 50 4079 300 
Aaro Koski, Analyst, Funding, +358 45 138 746

MuniFin’s Financial Statements Bulletin 1 January–31 December 2023 is published

In brief: MuniFin Group in 2023

  • The Group’s net operating profit excluding unrealised fair value changes in January–December increased by 3.2% and amounted to EUR 176 million (EUR 170 million). The net interest income grew by 7.5% propelled by rising short-term market rates and totalled EUR 259 million (EUR 241 million). The growth in result was slowed down by an increase in costs.
  • Net operating profit amounted to EUR 139 million (EUR 215 million). Unrealised fair value changes amounted to EUR -37 million (EUR 45 million) in the financial year. Unrealised fair value changes were influenced in particular by changes in interest rate expectations and credit risk spreads in the Group’s main funding markets.
  • Costs in the financial year amounted to EUR 82 million (EUR 73 million). The growth in costs was primarily driven by the almost quadrupled guarantee commission of EUR 13 million (EUR 4 million) paid to the Municipal Guarantee Board, which resulted from a change in the calculation method. The guarantee commission is a compensation for the guarantees the Municipal Guarantee Board grants to MuniFin’s funding.
  • The Group’s leverage ratio continued to strengthen, standing at 12.0% (11.6%) at the end of December.
  • At the end of December, the Group’s CET1 capital ratio was very strong at 103,4% (97.6%). CET1 capital ratio was well over the total requirement of 13.9%, with capital buffers accounted for. Because MuniFin Group only has CET1 capital, Tier 1 and total capital ratios are the same with the CET1 capital ratio, 103.4% (97.6%).
  • The Russian invasion of Ukraine has not had a significant effect on the Group’s operations. The war has accelerated inflation and pushed up market interest rates, which has had a positive effect on the Group’s net interest income, but also increased costs. Because of the geopolitical uncertainty caused by the war, the Group has maintained strong liquidity buffers. Otherwise, the war has had only a minor effect on the Group’s operations.
  • Long-term customer financing (long-term loans and leased assets) excluding unrealised fair value changes totalled EUR 32,948 million (EUR 30,660 million) at the end of December and saw an increase of 7.5% (5.5%). New long-term customer financing in January–December was at the same level as in the previous year and amounted to EUR 4,370 million (EUR 4,375 million). Short-term customer financing totalled EUR 1,575 million (EUR 1,457 million).
  • Of all long-term customer financing, the amount of green finance aimed at environmentally sustainable investments totalled EUR 4,795 million (EUR 3,251 million) and the amount of social finance aimed at investments promoting equality and communality totalled EUR 2,234 million (EUR 1,734 million) at the end of December. The total amount of this financing increased by 41.0% (42.9%) from the previous year. The ratio of green and social finance to long-term customer financing excluding unrealised fair value changes grew by 5.1 percentage points to 21.3%. In late 2023, the Group published its sustainability agenda, which extends to the year 2035. By the end of 2030, the Group’s goal is to increase the share of green and social financing to one third of all long-term customer financing, and by the end of 2035 reduce emissions from financed properties by 38% from the 2022 level.
  • In 2023, new long-term funding reached EUR 10,087 million (EUR 8,827 million). At the end of December, the total funding was EUR 43,320 million (EUR 40,210 million), of which long-term funding made up EUR 39,332 million (EUR 35,560 million). In March and in June 2023, the Group decided to repay the debt related to the European Central Bank’s targeted longer-term refinancing operations (TLTRO III). The debt totalled EUR 2,000 million.
  • The Group’s total liquidity remained very strong, standing at EUR 11,633 million (EUR 11,506 million) at the end of the financial year. The liquidity coverage ratio (LCR) stood at 409% (257%) and the net stable funding ratio (NSFR) at 124% (120%) at the end of the year.
  • The Board of Directors proposes to the Annual General Meeting to be held in spring 2024 a dividend of EUR 1.69 per share, totalling EUR 66.0 million. The total dividend payment in 2023 was EUR 1.73 per share, totalling EUR 67.6 million.
  • Outlook for 2024: The Group expects its net operating profit excluding unrealised fair value changes to be at the same level or higher than in 2023. The Group expects its capital adequacy ratio and leverage ratio to remain strong. The valuation principles set in the IFRS framework may cause significant but temporary unrealised fair value changes, some of which increase the volatility of net operating profit and make it more difficult to estimate. A more detailed outlook is presented in the section Outlook for 2024.

Comparison figures deriving from the income statement and figures describing the change during the reporting period are based on figures reported for the corresponding period in 2022. Comparison figures deriving from the balance sheet and other cross-sectional items are based on the figures of 31 December 2022 unless otherwise stated.

Key figures

 Jan–Dec 2023Jan–Dec 2022Change, %
Net operating profit excluding unrealised fair value changes (EUR million)*1761703.2
Net operating profit (EUR million)*139215-35.5
Net interest income (EUR million)*2592417.5
New long-term customer financing (EUR million)*4,3704,375-0.1
New long-term funding (EUR million)*10,0878,82714.3
Cost-to-income ratio, %*32.423.935.7
Return on equity (ROE), %*6.69.9-33.5
 31 Dec 202331 Dec 2022Change, %
Long-term customer financing (EUR million)*32,02229,1449.9
Balance sheet total (EUR million)49,73647,7364.2
CET1 capital (EUR million)1,5501,4824.6
Tier 1 capital (EUR million)1,5501,4824.6
Total own funds (EUR million)1,5501,4824.6
CET1 capital ratio, %103.497.65.9
Tier 1 capital ratio, %103.497.65.9
Total capital ratio, %103.497.65.9
Leverage ratio, %12.0111.63.8
Personnel1851755.7

* Alternative performance measure.
All figures presented in the Financial Statements Bulletin are those of MuniFin Group, unless otherwise stated

Comment on the 2023 financial year by President and CEO Esa Kallio

The year 2023 was the fourth consecutive year marked by instability. The rising geopolitical tensions and market volatility did not significantly affect MuniFin’s performance, and we were able to successfully carry out our core mandate of ensuring the availability of affordable long-term financing for our customers.

In 2023, the inflation exacerbated by the Russian invasion of Ukraine in 2022 took a downward turn, and interest rate hikes tapered off. Geopolitical tensions increased across the world throughout the year, and expectations of central bank measures caused uncertainty in the capital markets.

In Finland, the first half of the year was characterised by the parliamentary elections held in April and the ensuing government formation talks that stretched into June. The new government programme is unlikely to affect municipal operations directly. In the housing sector, our customers have been concerned about the government programme’s entries concerning right-of-occupancy housing and state-subsidised housing production. In this uncertain operating environment, our role as our customers’ trusted partner has grown even more important.

The demand for financing from our customers in the municipality sector was quiet at the beginning of the year, but demand picked up towards the end of the year close to the previous year’s level. Temporary tax benefits boosted municipal finances, causing municipalities to have lower financing needs. In municipal finances, 2023 was still a relatively good year, but started to weaken at the end of the year.

In the affordable social housing sector, financing needs were higher than in the year before. Our housing sector customers have suffered from rising construction costs for several years now, which has decreased the start of new building contracts. Rising interest expenses have taken a further toll on them since 2022. Towards the end of the year, however, the demand for financing started to pick up as construction costs levelled off and right-of-occupancy project starts were rushed because of the new government programme’s entries.

The new wellbeing services counties started their operations on 1 January 2023, and we financed the wellbeing services counties within the limits set by the Municipal Guarantee Board (MGB). The EUR 400 million limit for long-term finance set by the MGB was reached before the end of the year, and we could no longer fulfil wellbeing services counties’ financing requests for 2023 after that.

Our funding operations were a success despite the fluctuation in the capital markets. Our issuances were well-timed, and all our transactions were successful. We continued to keep our liquidity at a strong level throughout the year to ensure the availability of financing for our customers in all conditions.

Our operations continued in the usual manner in 2023, and our profitability was slightly higher than in 2022.

In 2023, we revised our strategy to further underline our core mandate. Our revised strategy highlights sustainability and our role as an enabler of sustainable welfare in society. We also made efforts to better assess and measure the impact of our operations. In October, we published our sustainability agenda, which sets the framework and goals for our long-term sustainability work. The agenda focuses on our business operations, i.e. the products and services offered to our customers, and the long-term impact achieved through them.

Outlook for 2024

The global economy is starting 2024 in a weakening economic cycle. The demand-slowing effects of interest rate hikes are reaching their peak and making sources of growth scarce, while fiscal policies are contracting as governments need to curb their debt. The geopolitical environment continues to remain unpredictable. On the upside, the cooling economy is helping to cushion cost pressures, and inflation is falling towards the ECB’s target of 2% in the euro area. The ECB is expected to commence interest rate cuts in 2024.

In Finland, the combined effect of factors saddling growth will peak in the first half of 2024. As the months pass and inflation eases, consumer purchasing power increases and interest rates start to come down moderately, the domestic market will gradually kick off economic recovery. Towards the end of the year, the export market may also start to contribute to recovery. Because of the low starting level, Finland’s GDP growth may nevertheless remain slightly in the negative in 2024.

The economic downturn will inevitably reflect on employment. In many sectors, Finland is suffering from such high structural labour shortages that strong growth in unemployment seems unlikely, but the employment outlook is nevertheless looking risky. It remains difficult to estimate how severe the construction sector’s recession will become and what multiplier effects this will have in other sectors. The euro area’s inflation trajectory is also looking somewhat uncertain. If inflation proves more persistent than anticipated and expected interest rate cuts are postponed, the downturn may drag on and push unemployment up more than expected.

Although Finland’s government programme sports ambitious fiscal efforts, public finances are projected to continue to show a significant deficit and high levels of debt in the coming years. The higher-than-expected increase in health and social services expenditure and financing costs and the cyclical decrease in tax income are making public finances difficult to balance. After a few exceptionally strong years, the municipal sector will return into serious deficit as various positive non-recurring items cancel out, costs increase and central government transfers decrease. The main uncertainties in municipal finances stem from the general economic development, the upcoming changes to central government transfers and the potential additional costs arising from the transfer of employment and economic development services (TE services) to municipalities.

Considering the above-mentioned circumstances, the Group expects its net operating profit excluding unrealised fair value changes to be at the same level as or higher than in 2023. The Group expects its capital adequacy ratio and leverage ratio to remain strong. The valuation principles set in the IFRS framework may cause significant but temporary unrealised fair value changes, some of which increase the volatility of net operating profit and make it more difficult to estimate.

These estimates are based on a current assessment of the development of MuniFin Group’s operations and the operating environment.

Municipality Finance Plc

Further information:

Esa Kallio, President and CEO, tel. +358 50 337 7953
Harri Luhtala, Executive Vice President, Finance, CFO, tel. +358 50 592 9454

Download the full Financial Statements Bulletin 1 January–31 December 2023

MuniFin_Financial_Statements_Bulletin_2023

MuniFin’s annual report 2023 will be published around 7 March 2024. On the same date, MuniFin Group will also publish the Pillar III disclosure based on the Capital Requirements Regulation, and the Corporate Governance Statement.

MuniFin’s USD 1.5 billion benchmark faced phenomenal demand

Only two weeks after MuniFin’s highly successful opening transaction of the year, MuniFin priced a new USD 1.5 billion benchmark on 24 January. Investor demand was phenomenal from the beginning and resulted in an all-time record orderbook of USD 4.4 billion. The bond is also the largest USD issuance since 2021.

The record-breaking bond carries a coupon of 4.250%, and was priced at SOFR mid-swaps+47bps, equivalent to a spread of +22.6bps over the UST 3.75% due 31 December 2028. From the initial price thoughts of +50bps, MuniFin was able to tighten the final pricing by 3bps due to the outstanding demand from high-quality investors. 

The final orderbook was of very high-quality and geographically diverse with 83 investors participating. In terms of investor type, the majority of allocations went to banks (49.1%), followed by central banks and other official Institutions (39.5%) and Fund Managers (11.4%).

Considering the busy primary market, the result was quite impressive and received praising comments from the joint lead managers on the transaction.  

“Congratulations to the MuniFin team on their first USD benchmark outing of 2024. The new USD 1.5 billion, 5-year benchmark garnered a high-quality orderbook amidst a busy primary market for SSA issuers. MuniFin’s agility in adapting to market windows once again enabled them to achieve attractive cost of funding for their activities which support the mission of building a better and more sustainable future for its clients. Deutsche Bank is proud to have been involved in this transaction”, said Katrin Wehle, Managing Director and Head of SSA CDM Origination at Deutche Bank. 

MuniFin’s funding programme is progressing at a very good pace, as after this transaction, the company has printed nearly 25% of its EUR 9–10 billion programme for 2024. 

“It has been a busy start for us at MuniFin, as we decided to kick off our funding year with two benchmarks and printed already a quarter of our funding programme within less than one month. We are extremely excited to break a new record with an overwhelming demand of USD 4.4 billion for this USD benchmark. We are humble for the exceptional reception and want to extend our thanks to all our investors and joint lead managers who participated in making this happen”, says Senior Manager Karoliina Kajova from MuniFin’s funding and sustainability team. 

Transaction details

IssuerMunicipality Finance Plc (“MuniFin”)
Issue AmountUSD 1.5 billion
Issuer RatingAa1 /AA+ (Moody’s / S&P) (all stable)
Pricing Date24 January 2024
Settlement Date31 January 2024 (T+5)
Maturity Date31 January 2029
Re-offer Price /Yield99.942% / 4.263%
Annual Coupon4.250%
Re-offer SpreadMid-swaps +47bps
Spread vs BenchmarkUST 3.750% due 31st December 2028 +22.6bps
ListingHelsinki Stock Exchange (Regulated market)
DocumentationIssuer’s Debt Issuance Programme dated 7 September 2023
ISINXS2757519280 / US62630CEK36
Joint Lead ManagersBarclays, BMO, Citigroup, Deutsche Bank

Comments from joint lead managers

 “Congratulations to the MuniFin team for another fantastic outing in the USD benchmark space. We are delighted to see the team achieve a record orderbook well in excess of USD 4bn and with granular interest from over 80 investors. The USD 1.5bn 5Y deal priced with minimal concession to the secondary curve, testament to the strong name recognition that MuniFin enjoys with investors around the world.“

Massimo Antonelli, Managing Director BMO Capital Markets

“Congratulations to the MuniFin team for a phenomenally successful USD outing, with this latest benchmark extending the issuer’s USD curve. The largest ever USD orderbook for MuniFin at USD 4.4 billion, as well as its joint-largest USD print over the past decade at USD 1.5 billion, is a testament to the firm standing of MuniFin amongst the global investor community.  Moreover, size did not come at the expense of price, with the trade seeing a 3bps move tighter in spread during execution and crucially with no attrition in the size of demand. Barclays is honoured to have supported this transaction.”

Francesco Polon, Director, SSA Debt Capital Markets, Barclays

 “An resounding return to the US dollar market for MuniFin. With a constructive and supportive primary market and stable macro backdrop, MuniFin priced their largest transaction in dollars since 2021 and achieved its largest ever orderbook with the transaction 2.9x oversubscribed. Citi is delighted to have been involved in this record-breaking trade. Congratulations!”

Ebba Wexler, Managing Director, Head of SSA DCM, Citi

Further information

Joakim Holmström, Executive Vice President, Capital Markets and Sustainability 

Tel. +358 50 4443 638  

Antti Kontio, Head of Funding and Sustainability 

Tel. +358 50 3700 285 

Karoliina Kajova, Senior Manager, Funding 

Tel. +358 50 5767 707 

Lari Toppinen, Senior Analyst, Funding 

Tel. +358 50 4079 300 

Aaro Koski, Analyst, Funding

Tel. +358 45 138 7465

Read more

MuniFin succeeds with a EUR 1 billion 10-year benchmark in a record breaking market

MuniFin succeeds with a EUR 1 billion 10-year benchmark in a record breaking market

The orderbooks were opened on with guidance at MS+26 bps area, but MuniFin was able to tighten the guidance and the books were closed at MS +24bps and in excess of EUR 2.2 billion.

Investor demand was driven by high-quality accounts and saw a particular interest from banks, central banks and official institutions, which comprised of 80% share of allocations.

Geographically the demand was particularly high in key European regions, with the Central European countries of Germany, Austria, and Switzerland comprising 38% of the allocations and Benelux 19%.

“Our commitment to the EUR market remains strong. This was our first benchmark of the year and the first 10-year benchmark in the last two years. Despite the heavy supply, investor demand in MuniFin benchmarks remains strong. Thank you to all investors, who participated and our lead managers for a successful transaction” says Antti Kontio, Head of Funding and Sustainability at MuniFin.

MuniFin’s 2024 opening trade in an extremely competitive market is a remarkable success.

“The strategy undertaken to benefit from favourable market conditions, while differentiating from the other supply to attain price objectives, highlights the agility of the funding team to adapt in a competitive beginning of year window”, said Thomas Leocadio, Co-Head Public Sector Origination at Natixis.

Transaction details

IssuerMunicipality Finance Plc (MuniFin)
Issuer RatingAa1 /AA+ (Moody’s / S&P) (all stable)
Issue AmountEUR 1 billion
Pricing Date10 January 2024
Settlement Date17 January 2024 (T+5)
Maturity Date02 February 2034
Re-offer Price /Yield99.127% / 2.851%
Annual Coupon2.750% (long first coupon)
Re-offer SpreadMid-swaps +24bps
Spread vs BenchmarkDBR 2.600% Due 15th August 2033 +67.9bps
ISINXS2748850927
Joint Lead ManagersDanske Bank, LBBW, Natixis, SEB

Comments from joint lead managers

“Congratulations to the MuniFin team on another great result in the EUR market issuing a well-oversubscribed 10-year benchmark at limited concession despite an extremely busy EUR primary market. Over the past years, MuniFin has established themselves as the leading Nordic SSA issuer in the EUR market and Danske Bank is proud to have supported MuniFin throughout that journey.”
Gustav Landström, Head of SSA Origination, Danske Bank

“At a time of increased uncertainty around state budgets and government elections, public-sector issuers with a dedicated mandate offer attractive alternatives for investors. MuniFin today did just that with their successful 2024 opening trade that added a new line on the long end of their curve and achieved strong investor reception with a high-quality book of over EUR 2.2bn.”
Patrick Seifert, Head of Primary Markets & Global Syndicate, LBBW

“Congratulations are in order for the MuniFin team that not only achieved a successful first benchmark returning to the 10-year tenor but navigated through a never-before-seen volume week in the EUR SSA primary market. The strategy undertaken to benefit from favourable market conditions, while differentiating from the other supply to attain price objectives, highlights the agility of the funding team to adapt in a competitive beginning of year window. It was a pleasure to be involved on this transaction and we look forward to the continued success of MuniFin in 2024.”
Thomas Leocadio, Co-Head Public Sector Origination, Natixis

“A great result from MuniFin and its first EUR Benchmark of the year, in what has been a record-breaking week in terms of primary issuance volume. With a well oversubscribed orderbook and spread tightening of 2bps from guidance, MuniFin once again proves its excellent track record in the EUR market. SEB is delighted to have been a part of this transaction and to have supported MuniFin reaching their funding target of EUR 9-10bn for 2024.”
Anna Sjulander, Head of SSA Origination at SEB

Further information

Joakim Holmström, Executive Vice President, Capital Markets and Sustainability 
Tel. +358 50 4443 638  

Antti Kontio, Head of Funding and Sustainability 
Tel. +358 50 3700 285 

Karoliina Kajova, Senior Manager, Funding 
Tel. +358 50 5767 707 

Lari Toppinen, Senior Analyst, Funding 
Tel. +358 50 4079 300 

Aaro Koski, Analyst, Funding
Tel. +358 45 138 7465

MuniFin awarded as the Best SSA ESG Bond Issuer

The award is given to an SSA, Sovereigns, Supranational, and Agencies, borrower that is active in international and local SSA bond markets, offering a full range of products, in private and public format, in multiple currencies across the yield curve and to the broadest range of SSA ESG bond investors. CMD Portal is an independent collaborative market data network for bond and money market professionals. 

CMD Portal praised MuniFin for our long-term commitment to sustainability. In October, one highlight on our ESG path, was the publication of the new Sustainability Agenda with clear long-term objectives for our sustainability efforts. The agenda sets two main themes: supporting the Finnish welfare society and accelerating Finland’s green transition through our financing, for which we source funds with our sustainable bonds.  

“Our customers play a significant role in achieving Finland’s climate goals. Therefore, we aim for at least one-third of long-term customer financing to be green and social finance by 2030. The most notable change compared to our previous initiatives, is that we set reduction targets for financed buildings. Our goal is to achieve a reduction to 8 kgCO2 per m2 by 2035 and our green finance plays a vital role in achieving this target”, says Sustainability Analyst Mikko Noronen from MuniFin’s Funding and Sustainability team. 

On the sustainable bonds front, the year had two successful issuances. In February, MuniFin issued a record-sized EUR 1 billion green bond, which was the largest ever EUR denominated green bond by a Nordic SSA issuer. It was quickly nearly twice oversubscribed and 80% of the high-quality orderbook was allocated to ESG investors. Another highlight was the successful USD 100 million social bond in August, which was issued as a private placement. 

“The past year continued to be successful on the ESG front and we are extremely happy for this recognition. We aim to maintain our presence in the sustainable bonds market also next year when we are planning to issue EUR 9 –10 billion of new long-term funding. The sizes of our sustainable bonds will depend on the development of the customer financing portfolio”, says Senior Manager Karoliina Kajova from MuniFin’s Funding team. 

MuniFin also wins runner-up for the Best ESG Issuer Award. Our active presence and successful issuances have been acknowledged by CMD Portal also before. In April, MuniFin’s record-size green bond earned the TopDeal acknowledgement, and in January, MuniFin earned the award of the Best Structured Notes Issuer, which was the third year in a row for this recognition.  

MuniFin is Finland’s pioneer in sustainable finance 

In 2016, MuniFin was the first financial institution in Finland to offer green finance for climate and environmentally friendly projects and was the first Finnish issuer of green bonds.  

In 2020, MuniFin became the first financial institution in Finland to issue social bonds, which is offered to projects that promote equality, communality, safety, welfare, or regional vitality.  

These bonds are an integral part of our funding strategy. Both green and social bonds have their own frameworks. 

Read more about our green and social bonds

Read more 

MuniFin issues a record-breaking EUR 1 billion green bond 

MuniFin’s sustainability agenda aims to increase the amount of sustainable finance and reduce financed emissions 

Further information  

Antti Kontio – Head of Funding and Sustainability  

+358 50 3700 285  

Mikko Noronen – Sustainability Analyst, Funding and Sustainability 

+358 50 479 7533 

Karoliina Kajova – Senior Manager, Funding  

+358 50 5767 707  

Lari Toppinen – Senior Analyst, Funding 

+358 50 4079 300  

Aaro Koski – Analyst, Funding 

+358 45 138 7465 

“Huomisen talous” Podcast: Holiday Special with MuniFin’s Funding Team

The past year has been far from ordinary. Low interest rates and inflation have been replaced by a historically fast rate-hiking cycle. So how did MuniFin’s funding look like over this extraordinary year – and what’s in store for 2024?  

The final episode of 2023 in our Huomisen Talous (i.e., ”Tomorrow’s Economy”) podcast differs a little from our regular broadcasting and switches to English. MuniFin’s field covers the Finnish public sector, but our Funding team also works with a wide range of international partners and investors outside of Finland. You can learn more about the MuniFin Funding team’s work also on our YouTube channel (link).

Chief Economist Timo Vesala sits down with Senior Funding Manager Karoliina Kajova and Funding Analyst Aaro Koski to discuss MuniFin’s issuances in 2023 and what the market looked like, as well as what are the plans for next year and the Finnish economy’s current outlook. Listen to the podcast below!

This episode concludes the podcast for 2023. The podcast’s spring season starts after the holiday break: the first episode of 2024 will appear on January 23rd. Listen and follow us on Spotify, SoundCloud or on Apple’s and Google’s podcast services.

MuniFin donates to youth and families, and to children’s cancer research

We interviewed both foundations about their mission and the role donations play in their operations. Leena Poutanen, the Director of Communications and Fundraising at the Mannerheim League tells us how they are present in the daily lives of children, youth and adults of all ages. Laura Paasio, the Executive Director of AAMU, explains the importance of donations for clinical cancer research for children in Finland.

The Mannerheim League for Child Welfare: the goal is a child-friendly Finland

The Mannerheim League (MLL) is an NGO that promotes the wellbeing of children, young people, and families. MLL offers its services nationwide to prevent problems in everyday life.

“Many families get to know our foundation through the peer support programs in schools, or by finding our family cafés where they get peer support for raising small children”, says Leena Poutanen, Director of Communications and Fundraising for MLL.

Christmas season highlights the loneliness of children and young people

Family time over the holidays is not a happy and joyful occasion for everyone. Families whose day-to-day life is already difficult, can face challenges during the holidays as routines and hobbies are put on hold for several weeks.

“Loneliness and anxiety among children and youths is unfortunately prevalent during the holidays, especially in families that lack support networks and safe adults. Our helplines and chats are open every day on Christmas and we also receive a lot of calls”, Poutanen says.

A healthy and secure childhood creates the foundation for wellbeing in adulthood

MLL helps people in all kinds of situations. Peer support and preventive action can have a major role in solving everyday problems. If issues are left unresolved, intervening typically becomes more and more challenging over time.

“The MLL Youth Network, Nuortennetti, is one of Finland’s most active platforms for young people. It’s a safe space that lets youths chat with each other as well as with a professional. Our website has over 200,000 visits annually. Young people visiting the site want to talk about questions that matter to them, such as sexuality, bullying, and relationships with parents and other adults in their life”, Poutanen says.

MLL’s work extends to all people from new parents to children, youths, young adults and senior citizens. For those considering parenthood, MLL helps with questions about what it means having children in this day and age. Seniors can also volunteer for MLL, for example, by acting as a ”borrowed” grandparent for a family.

One in five euros comes through donations

Valuing childhood starts by investing in social and health services for children and young people. According to Poutanen, impacts on children should always be assessed when making decisions about government aid.

“It is estimated that poverty among families with children will increase over the coming parliamentary terms. The current government’s programme includes cuts in the aid directed at NGOs; this means the role of private donations will become more important. Many forms of daily support are based on the activities maintained by foundations. Wellbeing services counties will not be able to reach the goals set for preventive work without the help of NGOs”, Poutanen says.

“Donations from private citizens and companies are hugely significant when it comes to planning our long-term activities. Currently, one in five euros we need comes through donations. Every penny matters: that’s why we are highly grateful for the Christmas donation made by MuniFin. This support will be directed to work that strengthens youth participation, supports the mental health of children and young people, and work that supports the parents.”

AAMU Children’s Cancer Foundation: life is worth researching

The AAMU Children’s Cancer Foundation funds clinical cancer research for children in Finnish University Hospitals. The foundation was established a decade ago to fill a gap in public funding.

“AAMU is the only foundation in Finland funding clinical cancer research for children. Public funding for this type of clinical research has never come from the state treasury”, explains Laura Paasio, the foundation’s Executive Director.

Clinical research is the prerequisite to developing treatment methods

University Hospitals treat children with cancer and develop new, improved treatment methods. Basic research receives grants from various sources, but it alone is not enough to develop treatments. Clinical studies are a vital link between treatments and basic research. Funding for clinical research was in danger ten years ago, even though it is necessary in developing more efficient, individual treatments.

“Projects for clinical research treatment take years. Current legislation prevents units from sharing information with each other, if one of them is not an official member of the research project. AAMU funds research costs and also sees to it that the funding supports all research projects that are opened”, Paasio explains.

The most modern cancer treatments – the goal is a healthy adulthood

The majority of AAMU Foundation’s funding is directed to children’s clinical cancer research. In the 1980s, the prognosis for recovery from a childhood cancer was only 20%. In recent decades, this figure has jumped up to 80%. The goal of the AAMU Foundation is a world where each child’s cancer could be cured.

“It is also important to note that cancer can be a different disease when it hits a child and when it hits an adult. That’s why it is extremely important to do separate research dedicated for children: more than 200 varieties of cancer among children have treatments and medication that are different compared to adult cancers and their methods of treatment”, Paasio says.

The foundation also wants to enable a healthy adulthood for every child diagnosed with cancer. Over 60 percent of child patients experience later effects at some stage of life, either due to the cancer itself or the treatments that can take a harsh toll on the body.

What’s the significance of donations to AAMU’s operations?

“Every donation is vital to us, as without them we would not exist. It warms our hearts that MuniFin wanted to offer us a donation: it goes to ensuring clinical research for next year”, Paasio says.

Private individuals and companies can donate to the foundation’s efforts in all modern methods, through one-time donations or recurring monthly donations.

“Currently we fund dozens of clinical research projects into children’s cancer in Finnish University Hospitals. This means that almost each and every type of childhood cancer is being researched. Thanks to donations made to AAMU, Finland is one of the leading countries in the ALLtogether research project for acute lymphatic leukemia”, Paasio says.

Read more:
The Mannerheim League for Child Welfare
AAMU Suomen Lasten Syöpäsäätiö (in Finnish)