Landsvirkjun

Landsvirkjun successfully secures funding via debut Green Bond in the US Private Placement market

March 9, 2018

Landsvirkjun has reached an agreement with US and UK institutional investors to issue its debut US private placement (“USPP”) in Green Bond format, for a total amount of USD $200 million which is equivalent to about ISK 20bn. The bond which closed today has been issued without a guarantee of collection and is in relation to build-up of the Theistareykir and Burfell II power stations. As before, Landsvirkjun expects net debt of the company to decrease in 2018.

The offering was very well received in the private placement market with the orderbook totalling just over $700 million, representing about 7x oversubscription from the launch size of USD $100 million. The bond has maturities of 4-, 5-, 7- and 10-years and carries an average weighted fixed interest rate of 4.14%, with semi-annual interest payments.

As part of the transaction, Landsvirkjun – generator of 100% renewable energy - has established a Green Bond Framework based on criteria set out under the ICMA Green Bond Principles. Proceeds of the transaction will be used for power projects utilizing renewable energy with positive environmental impact.

First Icelandic Green Bond

Landsvirkjun is the first issuer in Iceland to issue a bond in Green Bond format. The bond is understood to be one of the first Green USPP’s for a power company and one of the first Green USPP’s more broadly, in what is expected to be a growing sub sector of the market going forward.

Barclays and Citi acted as Joint Placement Agents in this transaction.

Hörður Arnarson, CEO of Landsvirkjun:

“Environmental and climate issues are among the most important concerns the world is facing today and it is crucial that a funding environment exists that encourages environmental and social responsibility in this respect. We are very proud to support the Green Bonds initiative and to be the first issuer of Green Bonds in Iceland. With this US private placement, without a guarantee of collection, Landsvirkjun extends the maturity profile of its debt in a low interest rate environment. This is the first green bond that Landsvirkjun has issued in the USPP market and this funding allows Landsvirkjun to further diversify its investor base.”

Green Bonds

Green Bonds enable capital-raising and investment, whereby a third party provides certification that the proceeds from the issuance are used in new and existing projects with environmental benefits, such as sustainable and renewable energy generation.

Landsvirkjun

Landsvirkjun is owned by the Icelandic state and is the country’s largest electricity generator. The company generates around 70% of all electricity used in Iceland with 100% renewable energy sources.

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