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FMO prices inaugural EUR500m five-year sustainability bond

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The Netherlands Development Finance Company (FMO) has priced its inaugural Sustainability Bond, a five-year EUR500m RegS transaction.

Through this transaction, FMO confirms its commitment towards environmental and socially responsible funding and the development of the sustainability bond market.
 
The proceeds of the Sustainability Bond support the financing of green and inclusive finance projects according to FMO’s sustainability bonds framework, which is aligned with FMO’s long term strategy of inclusive and green growth. Projects to be financed include those in renewable energy generation, energy efficiency, responsible agriculture, food production, forestry, transport, water supply and access, as well as microfinance institutions (MFIs) and micro, small and medium-sized enterprises (MSMEs).
 
Given the strategic nature of this transaction, FMO announced mid-October the intention to hold a series of investor meetings in Europe with a Sustainability Bond issue to potentially follow up.
 
With a strong market backdrop and limited competing supply, the transaction was announced on 5 November. Books for a EUR500m “no grow” transaction opened shortly after 10am CET on Wednesday with a spread guidance of midswaps +12/+14 bps, after collecting more than EUR500m in IoIs at IPTs of MidSwaps+15bps in the early morning. The final spread was set at MidSwaps +12bps only 15 minutes afterwards. The order book closed at 10.25am CET in excess of EUR 1.2bn.
 
The Sustainability Bond subsequently priced at MidSwaps +12bps, which offered an attractive spread for investors keen on sustainability exposure from a rare Dutch AAA Agency, especially taking into account the long-term commitment and strong financial backing of the Dutch State to FMO.
 
More than 50 real money investors were involved, highlighting the broad support for the Dutch EUR debut issuer and the growing interest in the sustainability feature of the bond.
 
Participation was especially strong from the Nordic region (27 per cent), the Netherlands (26 per cent), Germany /Austria (14 per cent) and France (13 per cent). The distribution was well balanced across the various types of investors, with a proportion of investors with ESG considerations estimated at around 75 per cent.
 
This transaction underlines the strategic goal of FMO to widen its institutional investor base away from their recent USD benchmarks, as well as Samurai JPY, AUD and CHF deals issued throughout the past years.
 
Crédit Agricole CIB, JP Morgan and Rabobank acted as jointbookrunners on this debut transaction. 

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