NIB – Financing the Future Nordisk Seminar, Nuuk, 28. marts 2019 Søren Kjær Mortensen
A shar A shared ed jour journey to ney to finance finance your our futur future 2
NIB's Mandate history NIB founded in 1975 and started operating in August 1976 Cross border investments Nordic Interest Baltic countries joined as member states 2005 Competitiveness and Environment Productivity and Environment
NIB as a long-term financing partner The Nordic-Baltic International Financial Institution ► Long-term view, sound banking principle ► Focus on productivity gains and environmental benefits ► Environmental due diligence ► Solid financial performance ► Annual lending of EUR 3-4 bn, loan portfolio of EUR 18.5 bn ► AAA/Aaa international rating since 1982 ► Recent years, stand-alone AAA/Aaa issuer credit rating ► Issues bonds on international capital markets ► Proven ESG competences
NIB long term financing Extends loans to projects with e.g. state, state-owned enterprises, municipals, larger corporates, Mid-Caps, PPP, financial institutions for on-lending or risk-sharing Maximum finance 50% of the project investment and hence, complements other financing. Loan amounts EUR 5 mill. – EUR 300 mill. Maturity 5 – 30 years Largest issuer of Green Bonds in the Nordic Baltic region Anchor investor in other Green Bonds in NIB's member states
Mandate? Mandate sets a purpose Purpose drives actions Actions achieve impact
Mandate process 1 2 3 4 5
NIB's quality stamp for green projects
NIB Arctic Facility Implemented end-2015 together with other strategy initiatives; non-member lending, Baltic, Mid- Cap, SME risk-sharing, and later investments in member state green bond issuances Increased attention to and prioritization of Arctic Region projects Climate effects in the Arctic area Economic potential Geopolitical implications EUR 500 million facility – fully deployed during 2016-2018. Areas: E.g. Energy (focus on renewable), infrastructure (roads, airports, ports, rail, telecom, hybrid ferries, city development etc.), mining (in an environmental sustainable way), SME on- lending/risk sharing
NIB's Arctic region definition
L O A N P R O J E C T SME SME leasi leasing f ng facili acility ty NIB and Norway’s SpareBank 1 Nord-Norge have launched a new NOK 1 billion (EUR 104 million) loan facility for SMEs and environmental projects in Northern Norway.
L O A N P R O J E C T Thir hird SME leasing d SME leasing facility in Norw acility in Norway ay NIB and Norway’s SG Finans launched a EUR 150 million loan facility for financing equipment leasing to SMEs in Norway.
L O A N P R O J E C T Capacity Ca pacity expansions xpansions at t Boliden's Boliden's mining mining oper operations tions in in Norther Nor thern Sw n Sweden eden A EUR 110 million loan finances Boliden's investment programme at the Aitik copper mine and the Rönnskär smelter.
L O A N P R O J E C T New ho New hospit spital al NIB and Kainuu Social and Health Care Authority have signed a 30-year loan agreement of EUR 76 million for the construction of a new central hospital of Kainuu region in eastern Finland.
L O A N P R O J E C T Water ter infr infrastr astructur ucture e in investments estments NIB has signed a 15-year loan deal with the City of Luleå to finance water infrastructure investments in one of Sweden’s fastest -growing economic areas.
L O A N P R O J E C T SME in SME investment estments NIB and Helgeland Sparebank have signed a loan programme of NOK 250 million (EUR 26.9 million) for onlending SMEs and environmental projects in the county of Helgeland in northern Norway.
New New po power er line line for a or a L O A N P R O J E C T brighter brighter futur future NIB and Statnett signed a 15- year NOK 1 billion loan to partly finance a new 420 KV power line from Ofoten in Nordland to Balsfjord in Troms.
Arctic Facility Agreed Loans Customers/projects financed 2016-2018 Investments at the Aitik copper mine EUR 76 EUR 110 Construction of a hospital. and at the Rönnskär smelter in million million Sweden. Municipal investment in upgrading EUR 150 Loan programme for equipment EUR 52.1 biofuel production, a sewage pipeline, million leasing to SMEs in Norway. million and expanding a drinking water plant. Onlending to SMEs and EUR 150 Loan programme for onlending to EUR 27 environmental projects in northern million SMEs in Norway. million Norway. EUR 105.4 Loan programme for onlending to EUR 107 Construction of a transmission line in million SMEs and environmental projects. million northern Norway. EUR 53.6 Loan programme for onlending to million SMEs and environmental projects.
NIB in Greenland
Grønland Grønlandsba sbank nken en A A loan of DKK DKK 25 mi million for r fi financing investme stments ts in energy y effi ficiency, including heating ting syste systems ms and distr strict t heating ting syste systems. ms.
Grønlands Selvstyre Three loans s for hy r hydropower r projects ts in Nu Nuuk, Sisimiut and Ilulissat, totaling EUR 110.5 million.
Tele Greenland A A loan of EUR UR 20 mi million fi finances ma marine rine fi fibre optic tic cable connecting ting Gr Greenland with th Ice Iceland and Can Canada
Kalaallit Airports International A/S – Nuuk Airport
Kalaallit Airports International A/S – Ilulissat Airport
Arctic Investment needs / opportunities from a bankers perspective Investments in the Arctic Region has not taken off as much as envisaged some years ago. Substantial capital resources will have to be mobilized Higher costs for investments and operation Larger infrastructure projects have significant and long lasting effects on economy, environment and society Resource prices are volatile; environmental and reputational risks
Arctic Investment needs / opportunities from a bankers perspective (II) Governments (including regional and local authorities) have to be engaged and long term committed. Bankable projects to be developed – PREDICTABILITY! – Clear political mandate – Well developed business case and financing/liquidity strategy will reduce implementation risks – Environmentally sound – Cooperation between stakeholders to ensure regional issues, transparent and level playing field as well as adequate safeguard practices – Competencies of management and board, plus access to qualified administrative, legal and technical advisors – Contractors experience with local permits and authority requirements Preparation – as well as analysis and processes - are crucial success factors
Arctic Facility 2.0? Kalaallit Airports International A/S? Urban development in Sermersooq or other Greenland municipality? Wind in Norway? Hydropower in Norway? More on-lending facilities in the Arctic Region?
NIB ENVIRONMENTAL BONDS 32
NIB ENVIRONMENTAL BONDS (NEBs) NEB Framework 33
NIB ENVIRONMENTAL BONDS Categories 35 Not for distribution in the USA
NIB ENVIRONMENTAL BONDS Impact reporting / NEB Annual Report
Task Force on Climate Related Financial Disclosure, TCFD Climate change => increased risk to the global economy; need to accurately price climate risk Climate footprint related financial reporting is still evolving Voluntary, so far, but more professional investors requires the information Hence, international rating agencies are implementing it into their ratings Consistent information disclosure across countries for the benefit of all stakeholders within the financial system. Resilience of an corporates preparedness and strategies, taking into consideration different climate related scenarios incl. 2 degree Celcius scenario Governance / resilience of strategy / risk management / metrics and targets Impact on revenues, costs, balance sheet, capital and financing (stranded assets) FI's will need to implement this focus in our analysis and report on our borrowers.
Thematic bonds
www.nib.int Søren Kjær Mortensen soren.mortensen@nib.int +35 +358 8 50 50 311 311 1 104 042
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