Publish date: 2017-05-12

GREEN BONDS

Volvofinans Bank has issued its first green bond, this being only the second such green bond ever issued in Europe that is intrinsically linked to the passenger car sector*. The transaction attracted a great deal of interest from capital markets and was considerably oversubscribed.

On 9th May, Volvofinans Bank issued a green bond amounting to SEK 700,000,000, with a maturity of 5 years. The bond is made up of a specially selected portfolio of loan and lease contracts. These contracts - which have been entered into by customers using environmentally-friendly cars i.e. those that are fueled entirely or partly by fossil-free fuels – are contracts that Volvofinans Bank is now refinancing through the green bond. These types of bonds are something that is increasingly being sought after in the capital markets, especially by fund and asset managers with a clear sustainability profile. This was very much evident in the order book, which amounted to SEK 1.6 billion before allocation. Examples of investors who subscribed include: Handelsbanken Fonder, SEB IM, SPP Storebrand, Öhman, Carnegie Fonder, If Skadeförsäkring AB and Linköping Council. In total there were 16 buyers of the bond, one of which was a foreign investor.

 "Green bonds are part of the Bank's sustainability work - work that is an obvious and integral part of our business strategy. At the same time, this type of "niche borrowing" gives us opportunities to attract new investors," says Conny Bergström, CEO of Volvofinans Bank

Proceeds from the bond will enable Volvofinans Bank to refinance its green portfolio of loan and leasing contracts that meet the above-mentioned criteria for zero or low CO2 emissions. A framework based on ICMA's ‘Green Bond Principles’ has been established, where the specific conditions for issuing Volvofinans Bank's green bonds and related refinancing are described therein. This framework has been reviewed by the independent climate and environmental research institute CICERO (the Center for International Climate and Environmental Research - Oslo) with Volvofinans Bank's green bonds being classified as Light Green. The framework for green bonds together with CICERO's statement is available at volvofinans.se.

This issue has been made possible through an internal collaborative project involving the Bank's Sustainability Officer and the Treasury Department. SEB acted both as an advisor on the framework as well as the arranger of the transaction.

*) Source: GlobalCapital

For further information please contact:
Lars Norland, Treasurer, Volvofinans Bank AB
Phone +46 (0)31-83 88 88
E-mail: lars.norland@volvofinans.se

Gunnar Ekeroth, Sustainability Officer, Volvofinans Bank AB
Phone +46 (0)31-83 90 49 
E-mail: gunnar.ekeroth@volvofinans.se