Bonds Issuance

A well-functioning market for debt capital depends on all participants fulfilling their responsibilities and obligations effectively. Bond financing relies on loan agreements that vary in their level of standardisation, and lead managers play a central role in ensuring a sound issuance process and ongoing follow-up of the issuer. Because lead managers act as a crucial link between issuers and creditors, we have established dedicated expectations for them. In our view, this contributes to more accurate pricing and more efficient and transparent markets. 

As a creditor, we have expectations toward both bond issuers and lead managers. Our expectations are based on the specific features of the Nordic debt capital market, which differ in some respects from responsibilities in the equity market.

The issuer’s role

• We expect issuers to have a solid understanding of debt capital financing and how the bond market operates. We also expect issuers to follow the NUES recommendations where appropriate.

• Loan agreements should be drafted in a way that reflects the relevant risk factors associated with the issuer and the bond in question. The rights and obligations in the loan agreement must be made clearly known to all investors before they invest.

• Issuers should provide information about material financial and operational risks, including those related to environmental and social factors. They must facilitate regular reporting and investor meetings throughout the life of the loan.

• If there is a risk that the issuer may breach one or more loan covenants, we expect a clear explanation of how this will be handled, either through preventive measures or actions to be taken if a breach occurs.

• Issuers should promptly disclose relevant news to the market, including negative information.

• Issuers should take an active role in situations involving amendments to the loan agreement or credit events. This includes ongoing communication with bondholders, the trustee, and the lead manager, in parallel with any negotiations with other stakeholders.

• All creditors should be treated equally within the established priority structure.

• Any renegotiation of the loan agreement must appropriately account for the altered risk profile, ensuring that compensation is correspondingly aligned, irrespective of the timing or manner in which bondholders cast their votes. 

• When issuing sustainability bonds, issuers should establish a framework that sets out the purpose of the financing and reporting requirements, and includes relevant sustainability information. The framework should specify the use of proceeds, the projects to be financed, and include clear and ambitious sustainability targets. It should follow recognised market standards such as ICMA’s principles for sustainable bonds and be supported by third-party verification.

The lead manager’s role

• We expect lead managers to assess the issuer’s financial position and relevant organizational and legal aspects in accordance with regulatory requirements, industry standards, and relevant recommendations. Creditors shall have access to relevant documentation and analyses.

• We expect credit analyses to be updated throughout the life of the loan, as needed and depending on the issuer’s credit risk. The credit analysis must be balanced and provide a credible account of the issuer’s risk profile, as well as relevant factors related to risk and governance.

• We expect lead managers to explain any deviations from what is considered a standard loan agreement, especially clarifying definitions and which key terms may not be included in the agreement.

• We expect lead managers to guide issuers on recommended standards and principles to follow in preparing all relevant documentation related to sustainability bonds. We further expect all documentation to comply with established market standards, such as ICMA’s principles for sustainability bonds, and to include ambitious sustainability targets.