Landsvirkjun issues green bonds to finance geothermal and hydropower projects

Theistareykir geothermal project; September 2016 (source: screenshot from TV2 video)

Alexander Richter 9 Mar 2018

Icelandic national power company Landsvirkjun has agreed with US and UK institutional investors to issue green bonds through a closed bond auction in the US market through a private placement. The deal amounts to a total of $200 million, or equivalent to about ISK 20 billion.

The bonds are non-governmental and related to the construction of Theistareykjavíkur geothermal power project and Búrfell II hydropower project. As before, Landsvirkjun’s plans assume that the company’s net debt will decrease in the year. Initially, a $100 million bond issue was launched, but the offer was well received and received over $700 million or equivalent to sevenfold.

The bonds are maturing after 4, 5, 7 and 10 years and carry 4.14% on average interest rates on a six-monthly basis.

Landsvirkjun, which uses energy from 100% renewable energy sources, has established a green framework framework under the International Capital Market Association (ICMA) guidelines for green bonds. The value of the issue will be allocated to energy efficiency projects with renewable energy sources that have a positive environmental impact.

The first Icelandic green bond issue

Landsvirkjun is the first issuer of green bonds in Iceland, according to a press release from the company. Then the issue of the first green bonds issued by the power company is closed bond issue on the US bond market and also with the first green bonds issued in that market, but it is expected that this market will expand in the next few years. Bond issuers were the financial institutions Barclays and Citi.

Hörður Arnarson, CEO of Landsvirkjun, says the company is proud to be the first publisher of green bonds in Iceland. “Climate and environmental issues are among the most important of our issues at the moment, and it is a pleasure to establish a financial environment that encourages good performance in terms of social and corporate responsibility. We are proud to support green bonds and be their first publisher in Iceland. With the bond issue, which is without state guarantee, Landsvirkjun prolongs the loan repayment process in a favorable interest rate environment. This is the first time Landsvirkjun issues green bonds in the US, and the issue is expanding Landsvirkjun’s group of lenders. “

About Landsvirkjun and green bonds

When issuing green bonds, the issuer receives loans from investors whose third party certifies that the value of the bond will be allocated to projects that have a positive environmental impact, such as renewable and sustainable energy production.

Landsvirkjun is a power company owned by the Icelandic nation and the country’s largest electricity producer. The company employs about 70% of all electricity in Iceland with 100% renewable energy sources.

Source: Landsvirkjun