Slovenia successfully issued its debut 10-year sustainability bonds worth €1bn on June 23, the finance ministry announced.
The transaction makes Slovenia the first country in the Central and Eastern Europe (CEE) region and the second in the EU after Luxembourg to issue a sustainability bond — a bond used to finance or re-finance green and social projects.
The coupon rate of the issue is 0.125%. It was priced at 99.554, at a reoffer yield of 0.170%. The spread on bonds was set seven basis points (bps) above mid-swaps, the ministry said.
Books closed in excess of €8.4bn, including €600mn joint lead manager (JLM) interest, with demand from more than 210 investors.
“The success of the transaction, with more than €8.4bn of demand, is a strong sign of the confidence that institutional investors have in Slovenia, and particularly in its role in financing environmental and social transition,” the finance ministry said.
“The proceeds from Slovenia’s Sustainability Bond will fund government investments that contribute positively to the republic’s environmental and social goals, and further promote and develop the domestic and international green, social and/or sustainability bond market,” the statement added.
The largest share of investors (28.3%) were from the Germany, Austria and Switzerland region, with another 20% from the UK and Ireland, 11.9% from France and Benelux and 11.6% from the local market. Smaller numbers of investors came from the Nordic region, Italy, Iberia, other parts of Europe and the Middle East and Asia.
In terms of type of investor, 47.4 % asset managers and insurance and pension funds, 35.3% were banks including private banks, 7.8% hedge funds and 7.5% central banks and other official institutions.
Two days earlier Slovenia granted a mandate to Barclays, BNP Paribas, Credit Agricole CIB, Goldman Sachs Bank Europe SE, J.P. Morgan and Nova KBM to organise calls with investors.
Credit Agricole CIB was a structural advisor in the process of preparing the sustainability bond framework.
In January, Slovenia tapped international markets with Eurobonds jointly worth €2.5bn. They included a €500mn, 60-year Eurobond, again setting a record for CEE with the longest-tenor Eurobond ever issued in the region.
While this is Slovenia's first sovereign sustainability bond, SID Bank was the first Slovenian lender to issue green bonds, getting away a €75mn green bond private placement on the international capital market in December 2018. Demand for the bonds totalled €172mn.