Nordic pension funds PKA and Folksam have invested in a new SEK11.5bn (€1bn) 2022 issue of Swedish krona-denominated sustainable development bonds from the World Bank, some of whose proceeds will be used to fight the coronavirus pandemic in developing countries.
Denmark’s PKA said it was the first investor to sign up, investing SEK4bn, with Swedish pension and insurance group Folksam also putting money into the issue.
The World Bank said the bond was aimed at raising awareness about its health programme – in particular how it was working with member countries to back efforts to prevent, detect, and respond to the rapid spread of COVID-19.
Ylva Wessén, Folksam group chief executive officer, said: “It feels very good to be able to make an investment that supports sustainable development projects including the fight against the negative consequences of the pandemic given our vision that our customers should feel secure in a sustainable world.”
The World Bank – which comprises the International Bank for Reconstruction and Development and the International Development Association – said Swedish bank SEB was the sole lead manager for the transaction, which was the largest priced by any sovereign, supranational and agency (SSA) issuer to date in Swedish krona.
Michael Nellemann Pedersen, PKA’s chief investment officer, said: “As a pension fund with members mainly working in social services and health care, we appreciate the opportunity to combine a good risk-adjusted return with a possibility to contribute to sustainable development including healthcare in developing countries.”
The DKK330bn (€44bn) labour-market pensions firm said that though the bond was not created as a result of the coronavirus pandemic, its proceeds would now largely go towards preventing and responding to the rapid spread of the disease, in countries including India, Peru and Paraguay.
Nellemann Pedersen said: “Right now we see how important a strong health system is for a well-functioning society.
“Half of the world’s population does not have access to very basic healthcare, and we know that poor countries with weak health systems are hit extra hard by disease outbreaks and epidemics,” he added.
The World Bank said every year about a billion people faced financial problems trying to afford healthcare, with 90 million pushed into extreme poverty. These investments would go to projects including those aimed at providing universal and inexpensive healthcare, it said.
The bank said the bond issue attracted investors from Scandinavia and elsewhere in Europe and that asset managers, pension funds, and insurance funds made up 91.3% of investors.
The security carries an annual coupon of 0.250% and a yield of 0.259%, has a settlement date of today and matures on 23 December 2022.