The interest in green bonds among institutional investors is still huge, and the interest is increasing, when it comes to SEK green bonds.

Lars Mac Key, who is responsible for green bonds in Danske Bank Debt Capital Markets, has analysed the 2018 Swedish green bond market. He concludes that the volume of issued green bonds has increased with 84 percent compared to 2017.

“Today, green bonds make up 10 percent of the total SEK bond market, and even in an international perspective, the growth on the Swedish market is extremely strong. In 2017, a total of SEK 38bn were issued in green bonds, which corresponds to 6 percent of our total bond market. 2018 reached a record high volume of SEK 70bn.”

State institutions among the greenest in Sweden

Several sectors contribute to the increasing volume in 2018, but the highest percentage growth comes from state institutions, the Sovereign, Supranational and Agencies (SSA), as well as from banking and finance.

During 2018, SSAs were the biggest issuers and accounted for 38 percent of the total volume. Leading players in this sector were Kreditanstalt fuer Wiederaufbau (KfW) and Kommuninvest, each with a total issuance of SEK 6bn. Both former and new international players are interested in the Swedish green bond market. Changes in basis swaps during 2018, first in EUR and later in USD, meant that international SSAs to an increasing level raised their eyes towards SEK. Among others, Nederlandse Waterschapsbank (NWB), Asian Development Bank (ADB) and European Bank for Reconstruction and Development (EBRD) issued green bonds in 2018.

Three-fold increase in the banking and financial sector
In the banking and financial sector, the volume increased three-fold from low levels in 2017, and accounted for 12 percent. This was very much because of the SEK 5.25bn covered green bond from Landshypotek Bank, which was not only the biggest SEK green bond ever, but also the first covered green bond. Additionally, it was the first covered green bond globally to fund sustainable forestry.

Corporates accounted for 25bn SEK, which correspond to around 36 percent, and this sector keeps its position as the second largest after SSAs. Not surprisingly, the sector is dominated by real estate, with repeating issuers like Vasakronan and first time green bond issuers such as Jernhusen, Klövern, and Willhem. An interesting newcomer was also the re-cycling company Stena Metall that paved the way for green bonds within its field.

A solid start to a green 2019
Though we see a global correction of credit charge, the global market for bonds and green bonds have had a good start to the year. During the first weeks of 2019, there have been more green bonds issued globally than during the same period of 2018.

“During the last years, other sustainable products like social and sustainability bonds have also increased. To this, we see new products like green commercial papers on the rise, in which Vasakronan shows the way” says Lars Mac Key.

In Sweden, the year has begun in line with expectations, and as an example Danske Bank has acted lead manager to Swedish real-estate company Willhem AB’s new SEK 800m green bond. The bond will finance among other things the development and acquisition of buildings with low energy use, and invest in renewable energy plants. Lars Mac Key estimates that 2019 will show a more cautious growth or end with an emission volume in line with 2018:


”The demand from Swedish and international institutional investors for green bonds will not decrease, regardless of the market conditions. In worse market conditions, green bonds can very well be the issuer’s key to the investors. I think we will see a normal year for SEK denominated bonds, and that green bonds will continue to grow in volume, even if more modestly than in 2018.”

Lars Mac Key: I’m full of hopes for a very green 2019
After Danske Bank was hired by Landshypotek Bank to structure and take the inaugural SEK covered green bond to the market last year, more players have shown interest. Lars explains that Danske Bank was recently hired by The Swedish Covered Bond Corporation (SCBC) to source possibilities for the first covered SEK green bond financing real estate loans such as mortgages.

”Real estate and mortgage backed covered bonds account for almost half the outstanding SEK bond volume. SCBC will pave the way for other green covered bond issuers, which creates an incredible potential for green bonds. In addition to this, the Swedish government recently announced that Sweden will issue a green bond in 2019, which means even greater potential. I’m full of hopes for a very green 2019,” says Lars Mac Key.


For more information about Danske Bank’s work with green, social and sustainable bonds, please visit to our Sustainable Finance site.