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Year 2019 in figures: MuniFin’s annual report and green bonds impact report for 2019 are published

MuniFin published its annual report 2019 On 4 March 2020. Responsibility report, which was previously published as a separate report, is now included in the annual report. At the same time, the company also published its green bonds impact report for 2019.

Watch the video below to see how MuniFin’s President and CEO Esa Kallio and the Head of Customer Finance Aku Dunderfelt sum up the year 2019.

New initiatives in sustainable finance

MuniFin has offered green finance for its customers since 2016. With the help of green finance the company wants to accelerate new projects supporting climate goals in Finland. By the end of 2019, 101 projects all over the country had been granted green finance and the amount of green finance disbursed totalled EUR 1.263 billion. In addition to environmental benefits, green finance enable also various social and economic impacts both locally and regionally.

– MuniFin green finance has steadily grown over four years to nearly EUR 1.5 billion. While there is no doubt that this is a significant amount, it is still too little. More trailblazers are needed to show others the way and to make the benefits of environmental investments more visible. The existing culture must be shaken across all sectors and in every investment decision, and transformed into a more environmentally sustainable model, says Rami Erkkilä, who is responsible for green finance product development at MuniFin.

In February 2020, MuniFin published its Social Bond Framework and launched social finance in the market. Social finance is targeted at investments in non-profit housing promoting equality and sense of community, as well as investments in wellbeing and education.

MuniFin annual report 2019 >

MuniFin Green bonds impact report 2019 >

MuniFin social bonds >

Further information:

Soili Helminen, Manager, Communications and Corporate Social Responsibility, tel. +358 400 204 853

Eeva Toivonen, ESG Analyst, tel. +358 50 464 3073

Green bondMuniFinSocial bondSustainability

Nordic issuers release 2020 update to their green bonds impact reporting guide

The Position Paper on Green Bonds Impact Reporting, originally launched in October 2017 by a group of ten Nordic public sector issuers, has been published in an updated version. The new version replaces the January 2019 version.  

– We find great value in working together. Advancing impact reporting practices remains a priority for all of us, says Björn Bergstrand, Head of Sustainability at Sweden’s Kommuninvest and coordinator of the Nordic cooperation.

With the EU Sustainable Finance Action Plan and the EU Green Bond Standard (EU GBS) soon to become a reality, the Nordic issuers are anticipating even stronger interest for a harmonised approach to green bonds impact reporting going forward. The group aims to contribute to the development of a methodology in this field.

– While the EU GBS and the Taxonomy are not yet in full force, certain recommendations have been added to accommodate the suggested requirements, says Björn Bergstrand.

This includes recommendations on providing both allocation and impact reporting, to distinguish between financing and refinancing, and to report a breakdown of projects by the nature of what is being financed. In addition, the Position Paper’s existing mapping to the SDGs has been expanded to incorporate also the EU Environmental Objectives. 

The updated recommendations will see the Nordic issuers report less CO2 impact, in relative terms, from many of their financed green investments. This is because the baseline emission factor for electricity has been revised downwards, from 380 g CO2e/kWh to 315 g CO2e/kWh, to echo updated grid factors from the International Energy Agency (IEA) and the International Financial Institutions (IFIs), including the European Investment Bank (EIB) and the Nordic Investment Bank (NIB).

Torunn Brånå, Head of Green Finance at Norway’s Kommunalbanken and chairperson of the cooperation’s technical/environmental working group, says the emission factor for electricity is a key assumption when calculating the environmental impact of the projects financed.

– Deciding on a joint approach for estimating the impact of electricity used, reduced or produced has been one of the important tasks of this group. Now, for the first time, the emission factor has been updated to reflect mainly a more ambitious expected decarbonisation of the European energy grids.

Torunn Brånå says revising the grid factor to result in less reported CO2 impact is good news.

– This means the development of our energy systems are going in the right direction. The revision will lower the positive impact of energy efficiency projects and renewable energy production, whilst reducing the negative impact of an increased use of electricity, be it for electrical bus fleets or the operation of a project.

Although developed with the primary aim of assisting Nordic public sector borrowers in reporting the environmental impact from their investments, signatories also hope that the Position Paper will prove useful for issuers from the private sector, issuers from other countries as well as for the investor community.

– Resolving climate issues is at the heart of government agendas and policy papers all over the world, with various actors increasingly being expected to demonstrate their impact and climate actions. The financial industry has a key role in the transition, not least in providing robust and credible transparency to stakeholders, says Eeva Toivonen, ESG Analyst at MuniFin and the Finnish spokesperson for the Nordic cooperation.

The Position Paper has been developed by a group comprising public sector green bond issuers from the four Nordic countries Denmark, Finland, Norway and Sweden. They include the local government funding agencies Kommunalbanken (Norway), Kommuninvest (Sweden) and MuniFin (Finland); the Swedish Export Credit Corporation (SEK); and seven Swedish municipal or regional issuers including City of Gothenburg, the municipalities of Lund, Norrköping, Västerås and Örebro, Region Skåne and Region Stockholm.

The issuers’ work is supported by SEB and Crédit Agricole CIB, with input from CICERO Shades of Green, the Nordic Investment Bank, as well as several investors.

About the Nordic Position Paper on Green Bonds Impact Reporting

The Nordic Position Paper proposes an outline for reporting environmental benefits of green bond investments. It also provides guidance on general matters such as to distinguish between reduced and avoided emissions, as well as to report impact in relation to disbursed green bond allocations.

Moreover, the Paper provides suggestions for metrics and indicators relevant to eight different project categories. The effort builds upon reporting approaches suggested by the Green Bond Principles and multilateral development banks, as outlined in the GBP Handbook – Harmonized Framework for Impact Reporting.

The Paper is used as the reference framework for emerging impact reporting platforms such as the Green Assets Wallet and the Nasdaq Sustainable Bond Network Platform. It is also referenced in the proposal for an EU Green Bonds Standard, published by the EU Commission’s Technical Expert Group on Sustainable Finance.

The Paper is available for download from the signatories’ web pages such as munifin.fi, kbn.com, kommuninvest.se and also from the ICMA Resource Centre for Green, Social and Sustainability Bonds, icmagroup.org.

Contact information

MuniFin
Eeva Toivonen, ESG Analyst, +358 504 643 073, email: eeva.toivonen@munifin.fi

Secretariat for the Position Paper and main contact for questions & comments
Kommuninvest
Björn Bergstrand, Head of Sustainability, +46 708 86 94 76, e-mail: bjorn.bergstrand@kommuninvest.se

Chairperson of the Nordic issuers technical/environmental working group
Kommunalbanken
Torunn Brånå, Head of Green Finance, +47 911 58 528, e-mail: tob@kbn.com


Position Paper on Green Bonds Impact Reporting Download

FundingGreen bondMuniFinSustainability

MuniFin publishes the first Nordic SSA social bonds framework and launches a new social finance product

With this launch, MuniFin continues to be the forerunner in offering sustainable finance products in Finland and in the Nordics.

MuniFin’s Social Bonds Framework is aligned with the Social Bond Principles published by ICMA and ISS ESG has provided a second opinion of the framework.

Social finance project selection is based on MuniFin’s Social Bonds Framework and final approval is made by the Social Evaluation Team. The team consists of two independent experts and one MuniFin representative.

Financing Finland’s welfare state

MuniFin is the largest provider of financing to municipalities and the social housing sector in Finland. Municipalities play a key role in maintaining Finland’s welfare state, as they are responsible for the majority of service production, including education and healthcare. Social housing organisations on the other hand ensure that affordable housing is available. They also aim to tackle social issues like homelessness and social exclusion.

The eligible project categories that have been selected for MuniFin’s Social Bonds Framework are in the core of MuniFin’s customer finance business. Eligible project categories under the Use of Proceeds include housing, welfare and education.

The projects have to meet additional criteria in order to be eligible for the Social Finance product. In the selection process, special emphasis is placed on targeting the most vulnerable parts of the population and areas where investments by the municipalities will likely have the greatest impact on the area’s vitality.

Social financing funded by social bonds

MuniFin plans to issue an inaugural benchmark sized Social Bond in the second half of 2020 and intends to make it an integral part of the annual funding program going forward. MuniFin’s themed bond issuances, consisting of green and social bonds, will account for roughly 10–15% of new funding annually.

– Corporate responsibility is in the very DNA of MuniFin. We strive to be in the forefront in the responsibility of our products and services, processes and operations. It seemed only natural to take this new step in broadening our sustainable product offering, says Joakim Holmström, the Head of Capital Markets at MuniFin.

MuniFin was the first credit institution in Finland to launch green finance for environmental investments in 2016. In the same year, the agency also issued Finland’s inaugural green bond.

Read more about MuniFin Social Bonds:

Information on social bonds, MuniFin Social Bonds Framework and a ISS ESG’s second party opinion on the framework are available at our Social Bonds site >

Further information:

Joakim Holmström, Head of Capital Markets
tel. +358 50 444 3638

Soili Helminen, Manager, Communications and CSR
tel. +358 400 204 853

FundingMuniFinSocial bondSustainability

MuniFin’s inaugural results webcast on 14 February 2020

Municipality Finance Plc will publish the financial statements for year 2019 on 13 February 2020. A webcast for investors and other stakeholders will be arranged in English on 14 February at 1:00 pm (EET) and broadcast live at munifin.videosync.fi/financial-statements-2019. A video recording will be available after the webcast on this webpage.

Presentations:

• Esa Kallio, President and CEO
• Timo Vesala, Chief Economist
• Joakim Holmström, Head of Capital Markets

There will be an opportunity to ask questions via chat channel after the presentations.

A recording of the webcast is available at munifin.videosync.fi/financial-statements-2019.

Further information:

Soili Helminen, Manager, Communications & CSR, MuniFin
tel. + 358 400 204 853

Edited on 17 February 2020: Added a mention about the opportunity to watch a recording of the webcast.

FundingMuniFin

Overwhelming demand for MuniFin’s EUR 1.5 billion benchmark

The announcement for the new November 2024 EUR benchmark was announced to the market late morning in London at 11:00 UKT on the 7th of January, with books officially opening the following morning at 8:15 UKT.

Demand for this deal was extensive and the orderbook started to build up quickly. The first update was provided to the market at 9:08 UKT with books in excess of EUR 1.8bn and guidance revised to MS –4 bps area. The final spread was set shortly after at MS –5 bps with final books finishing at EUR 3.9bn after closing at 11:05 UKT.

This transaction attracted a high quality group of investors and the composition of allocations was as follows: Official Institutions (47%), Banks (33%), Asset Managers (18%) and Insurance / Pensions Funds (2%).

The orderbook was very granular with diversified allocation to different geographical locations as follows: Benelux (24%), Nordics (20%), France (14%), Asia (7%), Other Europe (25%) and Other (10%).

Comments on the transaction

– An impressive outcome for MuniFin, refreshing their EUR curve with a new short 5 year benchmark. With a very high quality orderbook, pricing at at the tight end of guidance and with minimal new issue premium, the deal attracted MuniFin’s largest order book to date underscoring the extent of MuniFin’s investor following. Danske Bank is delighted to have supported MuniFin on this important transaction.
Gustav Landström, Global Head of SSA Origination Danske Bank, who acted as a joint lead manager in the transaction

– An outstanding result for MuniFin with their largest ever euro Benchmark. They showed great initiative to be the first Nordic SSA to come to the EUR market and were rewarded with an exceptionally strong quality orderbook amidst a very heavy supply backdrop
Adrien De Naurois, Managing Director, BofA Securities

– This impressive result from MuniFin is due to the agility to take hold of a strong window following the reopening of the market in 2020. The successful strategy of offering investors an attractive maturity and pricing level exceeded expectations. This is highly evident when looking at the record size final orderbook and notable quality of investors that took part. Nabil Menai, Managing Director, Global Head of SSA DCM at Natixis, who acted as a joint lead manager in the transaction

– MuniFin returned to the Euro market with a smashing transaction. Despite the geopolitical unrest, which could have hurt investor sentiment, the issuer assertively took the window. The heavy supply from sovereign issuers did not distract investors from the quality of the MuniFin offering and they got a record orderbook. It allowed a pricing very close to fair value and a distribution of the highest quality.
Olivier Vion, Head of SSA DCM and Syndicate, Société Générale

Details of the transaction

Issue sizeEUR 1.5 billion
Payment date15/01/2020
Maturity date15/11/2024
Coupon0.00%
Re-offer price101.183%
Re-offer yield-0.243%
Re-offer vs mid-swaps-5 bps
Lead managersBank of America, Danske Bank, Natixis, Société Générale

Further information:

Joakim Holmström, Head of Capital Markets, tel. +358 9 6803 5674

Antti Kontio, Head of Funding, tel. +358 9 6803 5634

FundingMuniFin

MuniFin plans to issue EUR 8.2 billion long-term funding in 2020

In 2020 MuniFin forecasts to issue approximately EUR 8.2 billion of long-term funding. The amount is slightly larger compared to 2019 – mainly due to the redemption profile. Focus on strategic currencies, in both EUR and USD, will continue. The plan is to issue approximately 2/3 of the funding through strategic trades and the rest 1/3 through tactical funding: other public markets, private placements and structured retail notes. This is also in line with 2019 allocation.

MuniFin is also planning to increase its presence in theme bond markets. Framework for Social bonds with the related Second Party Opinion will be released within few weeks’ time with the aim to issue the inaugural Social bond during H2/2020. In addition, a new benchmark sized Green bond is planned for 2020. Timing for this transaction will depend on the underlying green asset portfolio.

2019 has been successful in terms of new funding: EUR 7.4 billion has been issued by the end of the year. Out of this almost 65% has been issued in strategic public markets. MuniFin has issued two EUR benchmark transactions (5y and Green in 10 years), two USD fixed rate benchmarks (3 and 5y) and has tapped existing EUR benchmarks two times in 2019.

Top 4 currencies in 2019 have been EUR (35%), USD (29%), JPY (17%) and NOK (14%). These currencies account for more than 95% of the new funding issued in 2019.

FundingGreen bondMuniFin

Behind the scenes: a young entrepreneur Eerika shadowed MuniFin’s CEO Esa Kallio for a day

What was on today’s agenda?

“We had several meetings with people trying to sell something to Esa. MuniFin’s team in the negotiations always consisted of Esa and one other person, depending on the topic. We also attended a board meeting of MuniFin’s subsidiary Inspira, which focused on the company’s strategy and next year’s action plan”, Eerika says.

“I have had such an exciting day. MuniFin works with really important issues. I was expecting the place to be boring – and quiet. A lot of the staff are older, but they have young minds. The organisation clearly wants to stay competitive. The finance industry intrigues me because I like numbers. The experience has left me feeling that I want to learn more about this business.”

“It is extremely refreshing to talk to someone young and see your own work through someone else’s eyes”, Esa says.

Eerika wants Esa’s advice on which career path to follow in the future.

“You have a natural curiosity, and you are clearly adventurous. I think you would enjoy a job that involves interacting with people. You have a healthy self-esteem, and you are not afraid to put yourself on the line and always reach for the next step up the ladder”, Esa says.

A thriving café business back home

Eerika runs a live music café called Kukkakievari in Varkaus, which she renovated with her sisters.

Eerika and her 16-year-old sister Eliina run a live music café called Kukkakievari in Varkaus, which also employs their younger sister Meeri.

How did you come up with the idea of opening a café?

“Owning a live music restaurant has been my dream for a long time. I have been taking piano lessons for 11 years, and my sisters and I also perform in the café.”

However, it was Eerika’s neighbours who actually got the ball rolling. They wanted to do something useful with an empty outbuilding that they had on their property and suggested that Eerika and her sisters open a business there.

“I spent almost nine months in North America last year, because I wanted to get better at English. I was in Canada when my mother called me and asked whether I would like to run a café in the neighbours’ outbuilding with my sisters. We get on well with our neighbours, and they knew that we would probably like the idea.”

So how is business?

“Business is great. You can earn up to EUR 10,000 in the JA Company Programme, and we reached that limit after just three weeks. It was at that point that I decided to register as a sole trader.”

Eerika and her sisters advertised their business through the media.

“I tipped off our regional and local newspapers, and four of them sent reporters over to write an article about us. When they realised what it was that we were doing, they were fascinated. Facebook and Instagram have also been important in spreading the word.” 

Heart set on entrepreneurship and management

“Eliina and I are both back at school now and taking a break from the café. We do not want our customers to forget about us, which is why we are thinking about hosting a Christmas event of some kind, maybe a concert. Our plan is to reopen the café again properly in the spring and work first at weekends and then every day except Mondays for the summer holidays”, Eerika says.

Despite the undeniable success of their concept, Eerika and her sisters have their sights set on bigger and better things. They want to either expand the café or turn it into a catering business or a B&B.

“I have a meeting with a local restaurateur next week, whose advice and experience I hope will help me. I used to think that I did not know enough, but participating in the JA Company Programme has made me realise that you can always ask for help”, Eerika says.

Eerika and her sisters found out about the JA Company Programme through their local Enterprise Agency. The programme has taught them a lot about business planning and bureaucracy in particular. It has also given them many new opportunities, such as Eerika’s chance to take part in the Job Shadow campaign.

“I want to work in management, which is why I intend to go to university. I am currently leaning towards studying economics, because it is such a versatile subject. I like working with people. One day, I would like to be a human resources manager.”

MuniFin and JA Finland in a close partnership

“Eerika is an outspoken and enterprising young woman. If just 15% of Finnish teenagers were like her, our future and competitiveness would be guaranteed”, Esa Kallio says.

Encouraging entrepreneurship and preventing social exclusion among young people are crucial for the future success of Finland’s local authorities. This is why promoting education, familiarising young people with economics and politics early on and fostering entrepreneurial attitudes are at the heart of MuniFin’s corporate citizenship policy.

MuniFin is one of JA Finland’s main partners in 2019 and 2020. Schools can incorporate the JA Company Programme into their lesson plans to give their students knowledge and skills in financial literacy, work readiness and entrepreneurship. MuniFin will also have its own Signature Award category in JA Finland’s 2020 national entrepreneurship competition next spring.

In addition to the partnership with JA Finland, MuniFin is involved in Economy and Youth TAT’s entrepreneurship village project. The project is designed to give schoolchildren in the final year of primary school their first taste of the labour market, economics and political decision-making.

Text and photos: Soili Helminen

MuniFinSustainability

A Call for Mayors: Finnish cities are inviting their global counterparts to take climate action

In these videos the mayors Jan Vapaavuori of Helsinki, Pekka Timonen of Lahti and Marita Toikka of Kouvola describe the climate actions their cities are taking to fight climate change. They aim to encourage cities worldwide to take practical steps towards low carbon society – each step is important, and it is crucial that every city starts taking them right now.

The videos coincide with Finland’s Presidency of the Council of the EU in the latter half of 2019 and the UN Climate Action Summit in New York City.

Green bondMuniFinSustainability

Aku Dunderfelt to lead MuniFin’s Customer Finance

Aku Dunderfelt (born 1975) has been appointed as the new Head of Customer Finance and a member of MuniFin Executive Management Team. Mr Dunderfelt has previously worked in different positions in the financial sector, Mr Dunderfelt begins in his new position at MuniFin on 5 August 2019.

– Aku has extensive experience within the banking sector. He will bring with him strong expertise in customer relations, says Esa Kallio, the President and CEO of MuniFin

Further information:

President and CEO Esa Kallio, tel. +358 50 337 7953.

MuniFin

Timo Vesala appointed Chief Economist at MuniFin

Timo Vesala, 44, has been appointed as Chief Economist at Municipality Finance (MuniFin). The role of Chief Economist is new, since MuniFin has not previously had this position. Mr. Vesala held the role of Chief Economist at Savings Banks Group before joining MuniFin.

– Mr. Vesala has a strong background in research, portfolio management and most recently as a chief economist. This unique skill set brings along valuable and wide-ranging expertise. The role of the Chief Economist at MuniFin is different from similar positions in commercial banks as this role has an especially strong societal aspect. MuniFin’s mission is to build a better future together with our customers. With the help of Mr. Vesala’s new role we will be able to deepen our own expertise and support our customers’ every day work in a very concrete way by helping them to interpret the effects of global economic trends to municipal finances in Finland, says Esa Kallio, the President and CEO of MuniFin.

– As the Chief Economist Mr. Vesala will have a strong role throughout MuniFin’s organisation, supporting the decision-making in different business areas. MuniFin’s EUR 6–8 billion funding program makes it crucial to analyse the developments in the global markets, says Joakim Holmström, Head of Capital Markets at MuniFin. 

However, it is just as important to be able to offer insight of future trends in Finland.

– Besides the global markets, MuniFin’s Chief Economist has to understand the impacts of both international economic developments and Finland’s internal trends for the Finnish economy. This is crucial in order to thoroughly understand our customers’ operating environment, Mr. Holmström says.

– I see working as MuniFin’s Chief Economist an opportunity to be part of a company that has a central role in the Finnish society. Due to the wide-ranging nature of the role, I feel I am in a position to make a great impact. As an economist I want to give the company and its customers a reliable view on the big picture and the direction where the economy is headed, Timo Vesala says.

Further information:

President and CEO Esa Kallio, tel. +358 50 337 7853

Executive Vice President, Capital Markets Joakim Holmström, tel. +358 50 444 3638

Chief Economist Timo Vesala, tel. +358 50 5320 702

MuniFin