Terms of the Transaction:
Size: EUR 500mn
Coupon: 0.125%
Format: Fixed rate note / RegS
Issue Date: 13 April 2015
Maturity Date: 20 April 2022
Tenor: 7-year
Re-offer Price: 99.389%
Pricing: Mid-Swaps -13bps, equivalent to DBR 2% Jan-2022 + 26.6bps
Denominations: EUR 100k
ISIN: XS1219963672
Joint Bookrunners: Credit Agricole CIB, HSBC, J.P. Morgan, Rabobank
For more information about FMO Sustainability Bonds, please visit the FMO Sustainability webpage at: www.fmo.nl/investor-relations
Transaction Highlights:
On Monday, 13th April 2015, the Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO), the international development bank of the Netherlands rated AA+ (stable) by S&P and AAA (stable) by Fitch, has successfully priced its second Sustainability Bond, a 7-year EUR 500 million RegS transaction. Through this transaction, the issuer confirms its commitment towards environmental and socially responsible funding and the development of the Sustainability Bond market. At the same time, this is the issuer’s first 7-year transaction, extending FMO’s curve to its longest reference point of 2022.
The proceeds of the Sustainability Bond support the financing of Green and Inclusive Finance Projects according to FMO’s Sustainability Bonds framework, which is aligned with FMO’s long term strategy of inclusive and green growth. Projects to be financed include climate change mitigation (renewable energy and energy efficiency) and climate change adaptation, as well as Microfinance Institutions (MFIs). FMO's intention is to invest 70% of the Sustainability Bond proceeds into green projects. FMO is a member of the Green Bond Principles (GBP) and is aligned with the updated guidelines.
Given the strategic nature of this Sustainability Bond issuance, FMO announced mid March the intention to hold a series of investor meetings in Europe in preparation of a new Sustainability Bond transaction.
With a strong market backdrop and no competing supply the transaction was announced on Monday 13th April in the European morning, with an Initial Price Thoughts (“IPTs”) of MS -10area for a EUR 500mn transaction.
Investor interest was very strong from the outset and surpassed EUR 600mn within the hour, which led to the opening of books at the initial guidance of MS -11area. Momentum of investor demand remained strong which led to a tightening of the price guidance to the MS-12/-13bps range after books surpassed the EUR 1bn level. The book close needed to be accelerated as FMO had no flexibility to grow the transaction above the EUR 500mn size.
The Sustainability Bond subsequently priced at MS -13bps, equivalent to 26.6bps over the Jan-2022 Bund which offers an attractive spread for investors keen on sustainability exposure from Dutch AAA credit, especially taking into account the long-term commitment and strong financial backing of the Dutch State to FMO.
Distribution
Approximately 40 high quality real money investors were involved, highlighting the broad support for the Dutch EUR SRI issuer and the growing interest in the sustainability feature of the bond.
Participation was European denominated (83%), with particular interest from Benelux (27%), Germany (24%), France (16%) and UK (12%). The distribution balanced across the various types of investors, with the proportion of investors with ESG motivations estimated at 73%. In particular, the bond received strong support from investors focused on promoting green and socially responsible investments such as ACTIAM and ASN Bank, APG, BNG Vermogensbeheer BV, BNP Paribas Investment Partners, F&C Asset Managers, Humanis Gestion d’actifs, Kreditanstalt für Wiederaufbau, Newton Investment Management Limited, Robeco NV, Syntrus Achmea Vermogensbeheer, Union Invest, … among others.
This transaction underlines the continuation of FMO’s SRI strategy to widen its institutional investor base away from their recent USD benchmarks, and confirm their strategic commitment to the Green and Sustainability Bond market as well as the European SRI investor base.
Credit Agricole CIB, HSBC, J.P. Morgan and Rabobank acted as joint-bookrunners on this Sustainability Bond transaction.
About FMO
FMO is the international development bank of the Netherlands which supports businesses and financial institutions in developing countries with capital and skills as well as managing development funds on behalf of the Dutch government. FMO is 51% government owned, with strong government support via its support agreement with the Dutch state.
For further details please contact:
Huib-Jan de Ruijter Director (Financial Markets Director) Tel +31 70 3149531
E-mail h.de.ruijter@fmo.nl
Arthur Leijgraaff (Senior Treasury Officer) Tel +31 70 3149852
E-mail a.leijgraaff@fmo.nl
Ki Bae van Beek (Senior Treasury Officer) Tel +31 70 3149506
E-mail k.van.beek@fmo.nl
