The Swedish National Debt Office (Riksgälden) has appointed SEB as a structuring adviser on a green bond set to be issued in 2020, proceeds of which will be used for government expenditure on "sustainable investments and projects".
The Debt Office will work with other government offices to establish a 'green bond framework', which includes defining green expenditure for budgetary purposes. SEB, as adviser, is intended to assist this process, from developing the framework through to issuing the bond.
SEB was picked following a selection process that included criteria such as expertise and experience of green bond issuance, as well as an understanding of Sweden's sustainability policy and central government borrowing.
Hans Beyer, head of Financial Institutions Coverage at SEB, said: "This is confirmation of the expertise and experience that we have built up in the field of green bonds and confirms our leadership role."
In its guidelines for central government debt in the 2020-2023 period, published in September 2019 (https://www.riksgalden.se/contentassets/d12a695acb134550885b7910d42e89a0/debt-management-proposed-guidelines-2020-2023.pdf), the Debt Office noted that:
- The Debt Office will... issue green bonds no later than 2020, according to a mandate set by the government this July. The mandate stipulates that the issuance volume be determined in accordance with the objective of central government debt management and be easily accommodated within the scope of green expenditure identified in the central government budget. The issuance is to be evaluated in respect of, among other things, compatibility with effective management of the central government debt and the effects on the rest of the bond market.
- The Debt Office's assessment is that there is no need for specific guidelines for green bonds and that they shall fall within the general guidelines for composition and term to maturity. Adjustments to reach the maturity target can be made with derivatives, as is done for standard nominal government bonds. However, the introduction of green bonds has significance for the distribution of the debt among different debt types.
In the 12 months to the end of August 2019, the Swedish central government ran a surplus of SEk103.9bn, according to data from the Debt Office. Total central government debt outstanding at the time amounted to SEK1.073trn (€99bn). Ongoing debt reduction since the 1990s means the country is on target to reach a government gross debt ratio of 20% versus GDP within a few years, the Debt Office notes.