NIB’s funding strategy is to be a leading issuer of USD benchmarks, attracting global investors. The aim is to diversify the borrowing into different currencies and markets, including issuing NIB Environmental Bonds (NEBs).
To be in line with the market standard, the Bank decided in 2016 to convert its one-way credit support annexes (CSAs) to bilateral agreements with counterparties. Two-way CSAs reduce the counterparty exposure in derivative contracts by requiring both parties of contract to post collateral to each other. NIB has signed 17 agreements at the end of the year.
In 2016, NIB raised an all-time high of EUR 6.7 billion in new funding. The record high funding volume was mainly due to record disbursement on the lending side, but also due to liquidity requirements in connection with the above mentioned implementation of bilateral CSA agreements.
The Bank issued a total of 58 bonds in nine different currencies. At year-end, outstanding debt totalled EUR 23.9 billion in 18 currencies.
NIB issued three USD-denominated global benchmark transactions in 2016. The three-year, USD 1.25 billion global benchmark issued in February was the largest transaction issued during the year.
In July, NIB issued a second US dollar-denominated benchmark transaction: a five-year, USD 1 billion bond. The third benchmark, with a volume of USD 1 billion and a two-year maturity, was placed in September.
The three global benchmark transactions brought in a diversified group of global investors.
New borrowings in 2016
With three USD global benchmarks, the USD was the largest currency, representing 58% of the total funding. The second largest currency was EUR at 16%, followed by GBP at 9%. Of the Nordic currencies, SEK and NOK represented 6% and 5%, respectively.
The Bank successfully issued two syndicated GBP 250 million transactions with maturities in 2019 and 2021.
During 2016, the Bank was active in the Nordic currencies with total issuances of SEK 2,450 million and NOK 2,700 million. In EUR, the Bank saw a substantial appetite for long-dated callable structures.
NIB also issued three transactions in NZD during 2016, a new five-year NZD 200 million issue and two increases totalling NZD 75 million in the 2025 maturity line. In AUD, a total increase of AUD 245 million was made for the 2026 maturity line.
A major share of investors buying NIB’s bond issues during the year 2016 are located in Europe, including the Nordic countries (58%). Investors from the Americas accounted for 20%, and investors based in Asia for 17%. Investors from other regions contributed 5% to NIB’s annual funding.
New borrowings in 2016
As in the previous two years, the largest investor type was banks’ liquidity portfolios, accounting for 38%. Pension and insurance funds represented 25%, followed by central banks and official institutions at 21%, asset managers at 11%, and corporates and the retail sector at 6%.