Building a better future for Finland

Municipality Finance is one of Finland’s largest credit institutions. Established in 1989 for the purpose of developing the Finnish welfare state, MuniFin offers financing exclusively to Finnish municipalities, their majority-owned companies, joint municipal authorities, wellbeing services counties and non-profit housing organisations. 

The financial institution - owned by Finnish municipalities, the public sector pension fund, Keva, and the Republic of Finland - is also a pioneer in sustainable financing: It is the first credit institution in Finland to offer green finance for environmentally friendly projects and was the first Finnish issuer of green bonds. Equally, MuniFin is the first Nordic SSA public sector credit institution to offer social finance for domestic projects that promote equality, communality, safety, welfare, or regional vitality.

MuniFin’s green and social bonds have their own frameworks and project portfolios. The credit institution’s Green Bond Framework was first published in 2016, and currently has four project categories: buildings, transportation, renewable energy and water and waste water management. MuniFin updated the framework in August last year to provide more transparency around the eligibility criteria and to take into account the EU Taxonomy Regulation and the EU Taxonomy Climate Delegated Act, with the intention to apply both on a ‘best-efforts’ basis. MuniFin’s Social Bond Framework was published in February 2020, dividing projects into three categories: social housing, welfare (healthcare, sports, and culture) and education.

ESG investors rush to participate in record-breaking transaction

Looking to issue their first Green Bond in 2023, marking their inaugural transaction under their updated Green Bond Framework, MuniFin asked NatWest to support with the transaction in the role of Joint Bookrunner. This followed NatWest’s previous Euro Green Bond mandate for MuniFin issued in 2022 and its mandate for a conventional Sterling transaction in the same year.

Announcing the 5-year Green benchmark to the market, investor demand was strong from the outset, resulting in a first peak of €1.7 billion in order volume. After price guidance, orders continued to come in, with the final books totalling more than €2 billion. Robust investor support enabled the final size to be set at €1bn, resulting in the largest ever Green issuance by MuniFin. The transaction pays an annual coupon of 3.000%.

ESG investors played a key role in this transaction, with nearly 80% of the final issuance going to investors with some degree of ESG shading (derived from JLM syndicate ESG shading calculations approved by MuniFin). Banks and Asset Managers led demand, taking 46% and 31% respectively of the allocation. Looking at geographic distribution, the Nordic region accounted for 37%, followed by the DACH region with 29% and Benelux with 13%.

The more than twice oversubscribed transaction is the largest Euro Green Bond to date for MuniFin as well as the largest Euro Green Bond of all time in the Nordic SSA market.

NatWest determined to advance the sustainable finance market

Damien Carde, Head of FBG DCM, NatWest, commented: “With this transaction, MuniFin have issued their largest green benchmark to date. This represents an ongoing commitment from MuniFin to create large liquid benchmarks in Green format and also highlights an increased engagement from the investor community. The latter point is evidenced by a 2x oversubscribed book and issuance at fair value. ESG is at the core of NatWest’s business model and we are incredibly proud to have been involved in this issuance.”


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