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Danish bank’s green bond beats expectations reaching total value of $2.6bn

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Danish bank’s green bond beats expectations reaching total value of $2.6bn - Photo: Danmarks Nationalbank

Demand for the 10-year green bond was robust, being five times oversubscribed and with a total value of $2.6bn, writes Fiona Keating

The central bank of Denmark, Danmarks Nationalbank, has so far raised $570m to finance the government’s investments in green transportation and renewable energy.

Signe Krogstrup, a governor at Danmarks Nationalbank gave a statement saying, “we believe that the explicit government commitment to green spending, which the bonds ensure, and not least the subsequent reporting on the climate effects of the spending, helps to support and create transparency about our green ambitions as a country.”

Denmark’s Green Bond Framework, under which the bond was issued, is for investments including renewable energy and Danish green transportation.

This is the first of many, as a green bond issuance of around kr15 billion in 2022, is expected.

Mette Frederiksen, Denmark’s prime minister has set out a number of climate initiatives. She has pledged to spend  $1.58 billion on new climate initiatives.

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“Denmark must be a showcase for the world. But no one will follow us if our path is expensive, unmanageable and socially unjust,” Frederiksen told the Danish parliament in Copenhagen.

Demand for ESG funds is strong in Denmark. Danske Bank is the top Nordic sustainable bond arranger and ranked number 10 in the global green bonds according to Bloomberg’s league table for 2021.

The bank issued 118 sustainable bonds worth 325 billion kroner, three times higher than in 2020.

Danmarks Nationalbank outlines green bond framework

“Customer appetite for sustainable bonds has increased remarkably during the past three years and especially last year where the volume has grown faster than anyone could imagine,” said Lars Mac Key, head of DCM sustainable bonds, Danske Bank.

“Our customers want to secure financing that supports their sustainable transition and therefore we have seen an increase in all sustainable finance types.”

He added that green bonds were particularly high in demand for issuers as well as investors.

Mac Key expects 2022 will continue to be a strong year for sustainable bonds as they enabled issuers to link their finance to one or more sustainability targets.

What are your views on the role of Danmarks Nationalbank in the green bond market? Get in touch.

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