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 joins United Nations Global Compact

Global Compact is the world’s largest corporate responsibility initiative. The Compact’s ten principles of corporate responsibility bind companies to obligations related to human rights, working conditions, the environment, and anti-corruption. 

“In our business we have strived to prove that finance can really steer societal development in a positive direction. Global Compact is our way to show that we are committed to continuous development of corporate and environmental responsibility. The networking opportunities it provides will also help us gain further knowledge in this field”, says Esa Kallio, president and CEO at MuniFin. 

MuniFin has been a forerunner of sustainable finance in Finland by introducing the first green and social finance products in the country. This has also been noticed internationally. For example, MuniFin ranked 28th in the ESG risk assessment of nearly a thousand banks by Sustainalytics, the world’s largest independent provider of ESG research and ratings. 

“Responsible business is long-term work, and stakeholders’ expectations on corporate responsibility are always growing. That is why we will keep self-evaluating and seeking the most important targets for development for our customers”, Kallio states. 

Lenita Toivakka, executive director at Global Compact Network Finland, welcomes MuniFin to the network. “We’re happy to have an experienced and significant promoter of reponsibility such as MuniFin onboard. Our network gives them access to initiatives and programs to drive responsibility and sustainable growth even further”, she comments.  

Global Compact Network Finland now includes more than a hundred companies. 

MuniFin is also a member of the Finnishcorporate responsibilty network FIBS and Finland’s Sustainable Investment Forum Finsif. It is also a Climate Bonds Initiative partner and a WWF certicified Green Office.

Nasdaq Helsinki welcomes Municipality Finance as its First Social Bond Issuer

On 10 September 2020, Nasdaq announced that Municipality Finance Plc has listed its inaugural social bond on the Nasdaq Sustainable Debt Market at Nasdaq Helsinki. The bond notional is EUR 500 million with a maturity of 15 years, explicitly guaranteed by the Municipal Guarantee Board. MuniFin’s issuance is the first social bond listed on Nasdaq Helsinki and the first social bond issued by an SSA (Sovereigns, Supranationals, Agencies) issuer in the Nordic countries.

MuniFin has been an active green bond issuer for four years and is now expanding the offering into social bonds. The proceeds of the social bond issue will finance projects that fall into one of the three categories of social housing, welfare and education and they promote equality, sense of community, wellbeing and vitality of regions and/or municipalities. The first financed projects include schools, hospitals and health care centres and housing for people with special needs.

– We are extremely proud to be in the forefront of Nordic and European sustainable finance. Even if all of our financing is aimed at building and developing the Nordic welfare state, social finance is a flagship product that highlights the wide-ranging effects that municipal and non-profit housing investments have both on individuals and the society as a whole, said Esa Kallio, President and CEO at MuniFin.

– The investor response for our inaugural social bond was overwhelmingly positive. This is a strong testimony that the financial markets want to actively transform societies and make them more sustainable.

– With the help of issuers such as MuniFin, we have in recent years seen Nasdaq develop into an important hub for sustainable investments in Europe with more than 230 bonds listed on Nasdaq´s Sustainable Debt Market. Following many international firsts, such the first green corporate bond by Vasakronan and first city bond issued by Gothenburg, Sweden, we are especially happy to see continued leadership coming from the Nordic region, said Ann-Charlotte Eliasson, Head of European Debt Listings and Sustainable Bonds at Nasdaq.

– We are excited to welcome MuniFin, a Finnish pioneer in sustainable finance, as our first social bond issuer in Finland, said Henrik Husman, President of Nasdaq Helsinki.

– MuniFin was also our first green bond issuer in 2018, and we have now five sustainable bonds listed on Nasdaq Helsinki. We look forward to seeing additional issuers following this trend.

Source: Nasdaq Helsinki

MuniFin’s first social finance projects have been selected: they include housing for special groups, a wellbeing centre and a comprehensive school

Social finance is available to MuniFin’s customers, i.e. the local government organisations and operators within non-profit housing production. The projects to be financed must belong to one of the eligible project categories within MuniFin’s framework of social finance: housing, wellbeing or education. Another requirement is that the projects promote equality, a sense of community, wellbeing or the vitality of the municipalities or areas.

– MuniFin’s customers are responsible for a significant portion of the investments made in building the Finnish society and its infrastructure. We need to examine the need for investments, as well as the benefits and economic effects of investments broadly and in the long term, not only from the point of view of their economic, but also social and environmental impacts, says MuniFin’s Head of Customer Finance Aku Dunderfelt.

– Social investments have a much more extensive impact than most people realise. A library or public swimming pool, for example, influence people’s overall wellbeing and the community in multiple ways, Dunderfelt explains.

The first social financing projects were approved at the end of May. The projects are assessed and approved by a three-member evaluation team that comprises Jouni Parkkonen, Executive Directorof Association for Advocating Affordable Rental Housing – KOVA, researcher of municipalities Jenni Airaksinen from Tampere University and Financial Specialist in charge of social funding, Päivi Petäjäniemi, from MuniFin.

– The first approved projects for social finance are excellent examples of the spectrum of investments with a strong impact. Well-designed schools and student housing, for example, can have a wide-ranging impact on children and young people’s sense of security and community. Good design increases wellbeing but also prevents social exclusion, Päivi Petäjäniemi says.

Approved social finance projects

  • Foundation for Student Housing in the Helsinki Region (Hoas), several buildings
    Investing in the long life cycle of buildings constitutes sustainable urban construction that takes environmental impacts into account. Communal, high-quality housing for students plays an important role in supporting young people at a significant turning point in their lives and helps to create the preconditions for building an active, healthy everyday life and for preventing social exclusion.
  • Karstula comprehensive school, Karstula
    Well-functioning, healthy and safe facilities for early childhood education and teaching are a foundation for the well-being of children, teenagers and teaching staff alike. Solutions that support safety and a sense of community can have a significant effect on children and teenagers’ self-esteem and later life. Using the school as a venue for village events will bring vitality to the village andstrengthen community spirit and add to the municipality’s attractiveness.
  • Housing by Setlementtiasunnot, Jousenpuistonkatu, Espoo
    Setlementtiasunnot is a producer of housing whose housing concept is truly praiseworthy, as it diversifies the concept of ‘normal’, integrates members of special groups into the rest of society and supports the strengthening of all the residents’ sense of community.
    Communal housing solutions allow special groups to become involved with the wider community, which reduces loneliness, increases participation, prevents social exclusion and decreases the need for institutional housing and care. Some of the residents of these buildings are immigrants, and the project may profoundly promote their integration.
  • Sodankylä municipality, Sopukka Wellbeing Centre
    The evaluation team found the justification for the project very well founded. The circumstances in Northern Finland are exceptional due to the long distances, and regional challenges are considerable. Sopukka Wellbeing Centre’s operating model will boost the use of expert resources, make the healthcare supply chain more effective, considerably improve the safety of the region’s inhabitants and increase the region’s attractiveness. 
  • Turku Student Village Foundation, Tyyssija student housing, Turku
    Tyyssija is an ambitious sustainable development project that will impact the environment and community spirit in a versatile way. Communal, high-quality housing for students plays an important role in supporting young people at a significant turning point in their lives and helps to create the preconditions for building an active, healthy everyday life and for preventing social exclusion.
  • Versonsilmu Oy, Versokoti housing complex
    Safe and well-functioning housing solutions improve disabled children and teenagers’ access to education. Living close to the necessary services will increase their self-reliance and help them be more active, which in turn will considerably improve their mental and physical wellbeing. It will also make it easier for them to integrate with the rest of society, which will have long-term effects on the residents’ adult life.

Forerunner of responsible financing in Finland

MuniFin was the first Finnish credit institution to offer green finance back in 2016. It was also the first financial institution to provide social finance in the Nordic countries.

Responsible investment opportunities are more and more in demand in international capital markets. Resources for social finance are acquired through bonds earmarked for social projects, which are the focus of great investor demand. In 2016, MuniFin was the first Finnish green bond issuer. It is also at the front line of European financial institutions to issue social bonds.

Further information:

Päivi Petäjäniemi
Financial Specialist, Social Finance Specialist, MuniFin
Tel. +358 40 761 7665

Soili Helminen
Manager, Communications and Corporate Social Responsibility, MuniFin
Tel. +358 400 204 853

About MuniFin social bonds