Ár­borg issu­es initial sustaina­bility bond

In June, the municipality of Árborg issued the first sustainability bond in Iceland, where the proceeds are intended to finance green or socially beneficial projects.
25 June 2021

The issuance is based on Árborg’s sustainable finance framework, prepared in collaboration with Landsbankinn. The Bank also coordinated the issuance and sale of the bonds, and their admittance for trading on Nasdaq Iceland 21 June.

Hrefna Ösp Sigfinnsdóttir, Managing Director of Asset Management & Capital Markets at Landsbankinn: “Our collaboration with Árborg municipality was very successful. Favourable terms were achieved and the considerable over-demand is an indication of high investor interest in sustainable investment objectives. This issuance is seminal - the first issuance of a sustainability bond in Iceland. This is also the first time a bank coordinates the process from start to finish, from acting as advisor in the development of a sustainable finance framework, to the sale of the bonds and their admittance to trading.”

Sustainability bonds differ from green bonds in that the proceeds from their issuance finance projects with social aims. The bonds are issued to finance green and/or social projects that meet the requirements of Árborg’s sustainable finance framework, which in turn reflects the municipality’s strategy for sustainable and social development. The framework conforms with the guidelines of the International Capital Market Association (ICMA) and a second-party opinion was provided by Sustainalytics, a leading international provider of such certification.

The bonds, in the amount of ISK 1.4 billion, were sold in a closed offer with a 1.35% premium. Subscriptions came to a total of over ISK 3.1 billion.

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