We believe that this is an innovative development for the sustainability-linked debt market, offering sustainability-linked investment opportunities to Financial Institution Group (FIG) investors, a group who traditionally have not been able to get such exposure.
Also, the eligibility of an SLL must be verified by an external review, and so this structure serves to increase scrutiny. Lastly, however, the pricing seems not to have been that compelling for Nordea.
It is reported to have required an 8bp concession, and one month on, it is still trading in line with grey bonds, with green bonds significantly tighter. For the product to grow, pricing benefits for issuers are needed to offset the ongoing management costs.