Landsvirkjun issues green bonds to help fund hydro, geothermal development

12 March 2018

Landsvirkjun has announced it has successfully secured funding via debut Green Bond in the US Private Placement market, with the funding to be used to build the Burfell II hydropower station and the Theistareykir geothermal power station in Iceland.

Landsvirkjun reached an agreement with US and UK institutional investors to issue its debut USPP in Green Bond format, for a total amount of US$$200 million. The bond, which closed on Friday, was issued without a guarantee of collection.

In a statement, the Icelandic state-owned company said the offering was very well received in the private placement market with the orderbook totalling just over $700 million, representing about 7x oversubscription from the launch size of US$100 million. The bond has maturities of 4-, 5-, 7- and 10-years and carries an average weighted fixed interest rate of 4.14%, with semi-annual interest payments.

As part of the transaction, Landsvirkjun – generator of 100% renewable energy - has established a Green Bond Framework based on criteria set out under the ICMA Green Bond Principles.

Landsvirkjun is the first issuer in Iceland to issue a bond in Green Bond format.

 “Environmental and climate issues are among the most important concerns the world is facing today and it is crucial that a funding environment exists that encourages environmental and social responsibility in this respect,” commented Hörður Arnarson, CEO of Landsvirkjun. “We are very proud to support the Green Bonds initiative and to be the first issuer of Green Bonds in Iceland. With this US private placement, without a guarantee of collection, Landsvirkjun extends the maturity profile of its debt in a low interest rate environment. This is the first green bond that Landsvirkjun has issued in the USPP market and this funding allows Landsvirkjun to further diversify its investor base.”

Barclays and Citi acted as Joint Placement Agents in this transaction.



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