Finnfund has issued its €75m sustainability bond weeks after it said it was developing its own framework in this space to provide investment opportunities.
A statement from the firm said that its three-year bond carries a coupon referencing six-month Euribor +125 bps. The bond offering was allocated to approximately 10 Finnish and international investors, including a portion of dedicated sustainability bond investors and portfolios.
Jaakko Kangasniemi, managing director and CEO at Finnfund, said: “This is a strong sign of confidence for our impact investing activity. Sustainable development and climate action require funding, and these challenging times highlight the importance of investors like us. The global political and economic turmoil may also create new opportunities for investors.”
It was only at the beginning of the month that the firm said it was implementing its framework designed to support the continuation of its green, social, and sustainability bond issuances.
According to Finnfund at the time, the framework will allow it to issue three types of bond:
- Green bonds, to finance and/or refinance eligible green lending, equity investments, and mezzanine financing mainly targeting the objective of climate change mitigation and adaptation (Green Projects)
- Social bonds, to finance and/or refinance eligible social lending, equity investments and mezzanine financing mainly targeting improved living and health conditions for unserved groups (Social Projects)
- Sustainability bonds, to finance and/or refinance a mix of Green Projects and Social Projects (Sustainable Projects)
The proceeds from the issue of this new sustainability bond will be used to finance and/or refinance eligible green lending, equity investments, and mezzanine financing through the objective of climate change mitigation and adaptation and/or improved living and health conditions for unserved groups.
Net proceeds will be allocated to eligible projects with the objective to mobilise debt capital to support Finnfund’s mission to generate lasting impact by investing in businesses that solve global development challenges. In addition, it contributes to Finnfund’s goal to foster sustainable development by providing investment opportunities for private investors. In its strategy, adopted in January 2022, the company sets one of its targets to fund 50% of its investments with private capital by 2030. Mobilising private capital is key to achieving the UN Sustainable Development Goals (SDGs) in developing countries, given that the UN estimates the financing gap at $2.5trn per year.