On Monday, December 6th, 2021, the Treasury on behalf of the Republic of Latvia priced its debut (long) 8-year Sustainability Bond raising 600 million euro, with a reoffer yield of 0,263% and a coupon of 0,250%.
The Sustainability Bond issue benefitted from a strong order book over EUR 2.5 billion and interest from more than 120 investors, thus propelling the strong momentum necessary to tighten the spread from IPTs of MS + Low 30s to a final reoffer spread of MS + 25bp.
The Sustainability Bond Framework confirms Latvia's strong commitment to its environmental and social strategy, and supports the achievement of goals to mitigate the effects of climate change and ensure a climate neutrality by 2050, contributing to European and global climate objectives, as well as to the reduction of poverty and inequality of opportunities.
This is the first sovereign sustainability bond issuance from the Baltics and Nordics.
Minister of Finance J. Reirs: “Latvia is facing global climate challenges. This Sustainability Bond issue will positively contribute transition process to a climate-neutral and socially responsible economy, while facilitating long-term solutions for climate, environmental and social policy and their impact on future generations. The establishment of the Sustainability Bond Framework was achieved in close inter-ministerial cooperation and represents a milestone in Latvia`s path to achieving the country’s sustainable goals.”
The Sustainability Bond Framework was put together by an inter-ministerial working group representing several ministries and chaired by the Ministry of Finance The Sustainability Bond Framework was presented to investors in a deal-related roadshow hosted by Atis Zakatistovs, Parliamentary Secretary of the Ministry of Finance, on December 1, 2021, and was followed by a number of 1-1 meetings next day. The Framework has been reviewed by second party opinion provider «ISS ESG» and is aligned with the ICMA Green and Social Bond principles and Sustainability Bond Guidelines.
An amount equal to the net proceeds from the issue is intended to be allocated for the financing or refinancing of eligible expenditures falling within the eligible green and/or social categories, as such expenditures and categories are defined, and as described in the Sustainability Bond Framework (November 2021). The inter-ministerial working group will be responsible for preparing the Allocation Report and Impact Report, as further described in the Sustainability Bond Framework (November 2021), which will be made available on the Treasury web site.
The Joint Lead Managers were Barclays Bank Ireland, BNP Paribas and Credit Agricole CIB.
BNP Paribas and Credit Agricole CIB acted as joint sustainability structuring advisors.
The Sustainable bond issue was mainly allocated to asset managers and bank treasuries, largely from countries such as Germany, Austria, UK and Nordics.