Denmark launches pioneering sovereign green bond with Nordea’s support

The Kingdom of Denmark is poised to become the first sovereign issuer of a green bond aligned with the European Green Bond Standard (EuGBS) in September. Nordea is serving as joint bookrunner on the European Green Bond (EuGB) issuance and was joint coordinator on the European Green Bond Factsheet.

Denmark is issuing this green bond, and will issue future green bonds, as an EuGB under the factsheet, which has been externally reviewed by Sustainable Fitch. This compliance with the EuGBS means full alignment with the EU Taxonomy, ensuring high levels of transparency, credibility and environmental integrity, according to Danmarks Nationalbank.

The national bank is planning to raise up to DKK 10bn from EuGBs in 2025. These bonds will fund railway electrification, expansion of the electricity grid, renewable energy, afforestation and restoration of wetlands.

Financing Denmark’s green transition

Governor of Danmarks Nationalbank Signe Krogstrup says: “The European Green Bond Standard creates transparency and trust in the market – and the Danish state is leading the way by adhering to the highest standards, thereby supporting the development of green capital markets.”

As with Denmark’s outstanding green government bonds, the new EuGB is issued as a “twin” to the government’s 10-year conventional bond. The twin bond concept supports the liquidity in green bonds as investors can at any time switch to the more liquid conventional bond.

Peder Bach, Head of Large Corporates & Institutions Denmark at Nordea, emphasises the bond programme’s significance for supporting Denmark’s green transition:

“By offering our expertise, we’re helping to secure capital for Denmark’s green transition. This new government bond, which is the first sovereign EuGB to date, reflects Denmark’s commitment to transparency and sustainable finance. It gives investors very detailed information on what they’re funding.”

By implementing the new EU standard for green bonds, Denmark is demonstrating its practical application, paving the way for other issuers – including states – to follow suit.