EXCLUSIVE: Finland Debt Issuance Head: No Imminent Plans to Issue Green Bonds

7 February 2022

By David Barwick – Frankfurt (Econostream) – Finland remains disinclined to issue green bonds anytime soon, according to Teppo Koivisto, director of the Finance Division of Finland’s State Treasury and thus responsible for Finnish public debt management.


In an interview with Econostream on Wednesday (transcript here), Koivisto noted that growing questions about the inflation outlook were leading investors to consider the issue of duration more carefully.


Although Finland follows its peers’ green issuance activities ‘very keenly’, he said, ‘at the moment, we do not have any imminent plans here at the DMO to issue green bonds. What we’d like to see is more standardisation in the sustainable bond market overall.’


More standardisation ‘would be very helpful and welcomed’, he added. ‘Because it seems that for now, it’s a quite mixed bag, with a variety of different products in the market.’


Koivisto expressed appreciation for the approach of the NGEU to its issuance, which has helped prevent any potential concerns about a new large issuer from having materialised’, he said. ‘They have also communicated their strategy and operations well in advance, and that has been very helpful’, he said.


After having recently issued a new 20-year benchmark, a transaction he said had gone quite well, Finland has two more new euro benchmark bonds coming this year via syndication. Asked about the

possible characteristics of these remaining two transactions, Koivisto said the aim was ‘to replicate ourselves year after year.’


‘It’s a tradition that the first issue is the longest one, so we’re obviously looking at the 10-year segment for the second transaction and then the last one would be slightly shorter, so a maturity somewhere between 5 and 7 years’, he said.


It was apparent from interaction with the market that ‘investors are a little bit more cautious with regard to duration in this environment, given uncertainty about inflation and long-term yields going forward’, he said.


Koivisto made clear that Finland was not currently considering any particular innovation for its issuance.


‘Boring’s good’, he said. ‘We concentrate our long-term issuance in euro-denominated benchmark bonds to provide as much liquidity as possible into the euro government market. Short-term issuance is done with T-bills, mostly in euros but also in dollars. And then of course we prefer to issue a dollar benchmark on an annual basis, but dollar issuance is always subject to cost efficiency.’