On March 15, 2016 MuniFin issued a 1bn euro benchmark maturing in October 2021.  The transaction was MuniFin’s first euro benchmark in 13 years.

The coupon was fixed at a record low 0.1 percent with a re-offer yield of 0.122 percent. Despite the tight pricing, the benchmark was very attractive, with books closing in excess of EUR 1.6 billion.

The book was very granular with over 50 accounts participating from more than 15 jurisdictions. The demand was greatest in Europe, especially in Germany (20 %), France (16 %), the Nordics (15 %) and Benelux countries (9 %) and outside Europe in the Middle East (17.5 %) and Asia (10 %). The most important investor type that participated in the transaction were banks with a 50 per cent share, central banks and official institutions adding up to 38 per cent of the allocation. The share of asset managers and insurance and pension funds was 12 per cent.

– MuniFin’s mission is to ensure the availability of competitive financing for Finland’s municipal sector and government-subsidised housing production under all market conditions. To fulfil this, we actively strive to diversify our funding in different markets. We have consistently been building an investor base for example in the USD markets. With our growing funding needs, we also wanted to offer our investors a euro benchmark, says Executive Vice President Esa Kallio at MuniFin.

The lead managers were Barclays, Danske Bank, J.P. Morgan and Société Générale.

– The basis of MuniFin’s operations on the international capital markets are its stable and high credit rating. The investors also value MuniFin’s active investor relations work. These factors combined with the issuer’s ability to act fast in the markets were crucial for the benchmark’s success, says Samu Slotte, Head of DCM Finland at Danske Bank.

Further information:

Esa Kallio, Executive Vice President, MuniFin, tel. +358 50 3377 953 
Joakim Holmström, Vice President and Head of Funding, MuniFin, tel. +358 50 4443 638
Samu Slotte, Head of DCM Finland, Danske Bank, +358 50 68 924

Mtn-i, a British market data provider, awarded MuniFin the Agency Issuer of the Year 2015  award in its award ceremony on February 11, 2016.

– Being recognized as the best Agency Issuer is a significant achievement for us. SSA issuers have attractive investment opportunities to offer in the international capital markets, and the amount of active issuers is large. We have been building a strong presence in several markets and put a lot of effort into developing investor relations and a flexible product offering. The mtn-i award is a recognition for this work, says Esa Kallio, Senior Vice President and the Head of Capital Markets at MuniFin.

Earlier in December 2015 Capital Market Daily (CDM) chose MuniFin as the Best Structured Note Issuer and the Best Uridashi Bond Issuer.

MuniFin was in very good company; the only other winners besides MuniFin in the awards CMD Portal organizes in several categories were the German development bank KfW and the World Bank Group subsidiary IFC. The Best Issuers chosen by mtn-i were MuniFin, the World Bank, the Dutch ABN AMRO bank and energy giant Engie.

Further information:

mtn-i 2016 award winners

CMD 2016 Issuer Awards

On January 12, 2016 Municipality Finance (MuniFin) priced a highly successful GBP 300 million long 3yr benchmark. On January 13, 2016 the bond was upsized by a further 25 million to bring the total outstanding amount to GBP 325 million. The deal pays a coupon of 1.25 % and pays a spread of +50 bp over the UKT 4.50 % March 7 2019. Joint lead managers for the new transaction were Citi, Nomura and Scotiabank.

UK accounts took 37 % of the transaction and 33 % of the transaction was allocated to EMEA (excl. UK) accounts. Asian investors represented 17 % of the allocation and Americas 13 %. Central Banks and official institutions were the largest group by 60 % followed by Fund managers (23 %) and Financial Institutions (17 %).

– Having monitored the market for a long time already, we decided to take advantage of the available issuance window and favorable swap dynamics by going for Sterling as our first benchmark line of 2016, says MuniFin’s Head of Funding, Joakim Holmström.

– We are very pleased with the outcome of this transaction and especially the strong participation from the Global Central Bank and the UK Asset Manager community is a great statement of our strong credit quality and investors’ continuous support for our benchmark strategy, Holmström concludes. 

MuniFin issued its second USD benchmark for the year 2015 on September 2. The one billion US dollar benchmark was the first USD benchmark following a period of volatile markets caused by the turbulence in China.

A day prior the books opened, the initial pricing thought was announced at +mid-teens basis points versus mid-swaps. There was encouraging interest in the market, but due to a slowish start in underwritings it was decided to maximize investor interest with opening the books at mid-swaps +17.

The 3-year benchmark was quickly oversubscribed and ended at nearly USD 1.1 billion. The coupon interest of the loan is 1.25 per cent.

– In treacherous market conditions, the success of this transaction reflects not only the quality of the MuniFin credit but also the nimble approach of the issuer. (…) It is an impressive example to other issuers of how to navigate challenging markets, says Alex Barnes, a Head of SSA Syndicate with CitiGroup.

The transaction had a broad geographical participation across Americas (30 %), Asia (27 %), EMEA (32 %) and the Nordics (11 %).

– MuniFin managed to issue an oversubscribed benchmark despite extremely challenging market conditions. This proves that the pricing was right, but is also a result of MuniFin’s strong credit ratings and excellent position in the international capital markets. Long-term IR commitment yields great results, says Esa Kallio, Executive Vice President and Head of Capital Markets at MuniFin.

After the completion of this transaction, MuniFin’s total funding for the year now stands at EUR 6.2 billion.

The lead managers of the benchmark were BNP Paribas, Citi, Daiwa and Nomura.

Municipality Finance Plc (MuniFin) increased the existing Kangaroo 2024 bond on April 17th by 75 million AUD. After this transaction the size of the bond is AUD 500 million. The original transaction was issued in March, 2014 with final maturity of 10 years and there has been three tap transactions before the most recent one.

Dealer banks for the increase were Nomura and RBC Capital Markets. The increase was priced 39 basis points over the Australian swap rate, which is in line with MuniFin’s peers.

Australian Kangaroo market is an important funding source for MuniFin due to long-term maturities. Investor base for the increase was well diversified around the world: 50 percent went to Australian investors, 27 percent to Japan, 15 percent to Europe and the remaining 8 percent to South America.

The Finnish Financial Supervisory Authority FIN-FSA confirmed that it regards the bonds issued by Municipality Finance Plc (MuniFin) as HQLA Level 1 liquid assets.

The definition of Level 1 assets are outlined in the European Commission’s delegated act with regards to liquidity coverage requirement (LCR) for credit institutions.

Finnish FSA’s confirmation was published on March 24, 2015. The statement is based on the fact that MuniFin is a credit institution established and owned by the Finnish public sector and that the bonds issued by MuniFin are guaranteed by the Municipal Guarantee Board, which is a public sector entity guaranteed by the Finnish local government sector with fiscal autonomy to raise and collect taxes.

The definition is a result of MuniFin’s request from November, 2014 to receive a statement on whether the bonds issued by MuniFin can be treated as highest HQLA Level 1 assets from the investors’ point of view.

The credit rating agency Moody’s once again interprets that the future changes in the Finnish municipal system will benefit Municipality Finance (MuniFin), the largest lender to the Finnish municipalities.

In its issuer comment published on January 19, Moody’s estimates that the Finnish Supreme Administrative Court’s decision in December to approve the government-mandated merger of two Finnish municipalities (Lavia and Pori) is credit positive for MuniFin. With the mandated merger, the government pursues to strengthen the municipalities’ financies and create economies of scale.

In its comment, Moody’s expects there will be more consolidation going forward. The Finnish municipalities are relatively small, with 217 out of the 320 Finnish municipalities having a population below 10,000.

Moody’s stated that the consolidation of the municipal sector, helped by the supreme court ruling, will have a positive impact on MuniFin’s asset quality.

In December 2014, Moody’s published a comment about the effects of Finland’s proposed municipal law for MuniFin, which it expected to be credit positive.

Moody’s long-term credit rating for MuniFin is Aaa stable.

Municipality Finance (MuniFin) issued on January 14, 2015 a 1 billion USD global benchmark loan to investors. The 5-year fixed rate benchmark loan offering was a 1.5 percent coupon interest rate and a 1.554 percent re-offer yield.

MuniFin last issued a 3-year USD global benchmark in September 2014 with exceptionally strong response from the market. The 5-year transaction this January was considered an optimal fit for the current ALM requirements.

The price was confirmed at mid-swaps +10 basic points, which is the tightest pricing ever recorded for a 5-year benchmark loan. In the current volatile market, MuniFin was happy with the pricing and overwhelming investor support for the transaction.

The investor spread was wide both geographically and institutionally, with almost 40 accounts participating. There was a focus on EMEA and Americas investors, and strong support from central banks, official institutions and bank treasuries.

The lead managers of the benchmark were Barclays, J.P. Morgan, Nordea and TD Securities.

Currently all of MuniFin’s lending is funded from the international capital markets. The benchmark loan in January was MuniFin’s 13th transaction in 2015.

Further information:

Esa Kallio, Executive Vice President, Deputy to CEO, tel. + 358 50 3377 953, esa.kallio@munifin.fi

Joakim Holmström, Vice President, Head of Funding, tel +358 9 50 444 3638, joakim.holmstrom@munifin.fi

The credit rating agency Moody’s believes that the new municipal law, proposed to the Finnish government on November 27th would be credit positive for Municipality Finance (MuniFin).

The new law would require municipalities to report their financial performance and to balance their budgets on a group basis, including the companies they own. The proposed law would require municipalities to close consolidated deficits within four years. 

Moody’s estimates that MuniFin would benefit from the enhanced disclose and deficit closure rules. MuniFin is Finland’s only lender focused on the financing and financial risk management of municipalities and municipally owned corporations.

Moody’s long-term credit rating for MuniFin is Aaa stable.

Published every Monday and Thursday, Moody’s Credit Outlook provides its credit implications of current events. The comment on Finland’s proposed municipal law and its effects on MuniFin were published on December 4th.