Hope ry (short for rekisteröity yhdistys, or registered association) is an organisation that works to ensure all children have an equal opportunity to live a good life. When families are financially struggling, children’s hobbies are especially at risk of being discontinued, or a child may have to miss out on fun activities like birthday parties. Sometimes families might not be able to buy necessities like clothes or hygiene products. 

“Each family has their own circumstance that causes a strain to their budget. We help single-parent families, low-income two-parent families, and families undergoing a crisis, such as one caused by a breakup, illness, disability, or the death of a loved one,” says Eveliina Hostila, Executive Director of Hope. 

Poverty can cause worry, exclusion from social circles and burnout. There is stigma associated with poverty, even though experiencing poverty is not anyone’s choice. 

Supporting children’s hobbies brings joy to the entire family 

Hope directs the donations for three causes. Donated items are distributed to families in need, and monetary donations are directed to Hope’s hobby support and other leisure activities. 

“Young people should be able to enjoy activities within their everyday life. But when money is tight, something must be cut. The number of applications for hobby support is constantly increasing; that is why we are directing MuniFin’s donation to the hobby program,” Hostila says. 

From the perspective of an adult, a missing toy or a hobby may seem like a minor thing. However, these things are particularly meaningful to children. A hobby can be a lifeline for a young person who at school feels like an outsider. It can also be a major part of their identity – for a young football player giving up their team and their jersey number can feel devastating. 

To help is to raise hope 

Each year, over 9,500 families ask for help, and most of them contact Hope several times a year. The organisation operates fully on donation funds. Volunteers also donate time to sort items, meet families, process hobby applications and help distribute donations. 

“The joy of receiving something is as strong as the feeling to be without something. Families often feel overwhelmed that someone really wants to help. It is amazing to see the power of people creating positive feelings: where there is a will, there is hope,” Hostila sums up. 

MIELI provides crisis help and strengthens mental health 

MIELI Mental Health Finland ry is a registered association that has been in operation for more than 120 years. The main mission of MIELI Mental Health Finland is to promote mental health and prevent issues. A core component of MIELI’s services is its 24/7 crisis hotline. 

“The need for help is increasing. Last year we received over 416,000 calls and were able to answer only every fifth call. People are distressed and worried, and topics cover a range of issues from personal relationships to livelihood, illness or simply coping with life. Serious issues, such as self-harm, are addressed on the hotline approximately 18 times daily,” says Liisa Partio, Communications Director of MIELI. 

MIELI provides help without a referral during the crisis centre’s reception hours and in the crisis chat service. In addition, MIELI coordinates the Sekasin Collective, which produces the Sekasin chat service for 12-29-year-olds. In Sekasin chat, receiving nearly 160,000 contacts annually, social and healthcare professionals and trained volunteers help young people solve problems. 

The holiday season can be challenging for mental health 

People can experience anxiety or loneliness during the holiday season. A time of the year perceived as a joyful celebration, spending time inside four walls can cause sorrow and conflicts. Some people spend the holidays alone, some for the purpose of avoiding harmful situations. 

Every year MIELI holds a fundraiser to help young people during the holidays. MuniFin’s donation is directed to crisis work so that as many people as possible receive help. 

Budget cuts increase the importance of donations 

Every other Finn experiences a mental health challenge over lifetime. Strengthening mental health is a task in which anyone can participate. The proportion of donations in MIELI’s funding is currently 10%, but in the future, the importance of donations will be even more crucial. 

“The Finnish national budget is being reduced under the current government. As a result, one third of the state subsidies to social and health NGOs will be cut. Changes will set in place as early as next year. I fear in the future these cuts cause more people to be left without the support they need,” Partio says. 

“It has been a pleasure to see companies and individuals make donations to ensure that our work can continue. It gives hope for the future. The significance of our work is evident in the feedback we get. Many are grateful to have someone who really listens to them – with an answered phone call, they have the strength to face tomorrow,” Partio continues. 

Since the summer of 2022, this exceptional building has added life to the scenery of the municipality of Tuusula in Southern Finland. The Martta Wendelin Daycare Centre, designed with children’s needs in mind, won the prestigious Finlandia Prize for Architecture for its distinctive architecture and execution.

User-oriented approach and ecological values steered the project

As part of the service network design in 2018, Tuusula resolved to replace several old daycare centres with new buildings. Stemming from a vision of preschoolers, the Martta Wendelin Daycare Centre was established, resulting in a new daycare centre in Tuusula with 10 groups, providing about 200 daycare places for children.

“The idea for the daycare centre was born when we started sketching a vision of the dream playground together with preschool-aged children. Later, the Martta Wendelin Society joined the project. This was natural, as the artist Martta Wendelin, known for her depictions of Finnish rural and home life, spent most of her life right here in Tuusula,” recalls Tiina Simons, Director of Education in Tuusula, about the early stages of the project.

Martta Wendelin’s art is also a prominent part of the daycare’s interior decoration.

“The entire project has been carried out using user-centred design. The history of Tuusula has been brought into the building in a skillful and beautiful manner,” says Pirjo Sirén, Director of Municipal Development.

Significant efforts have been made in the implementation of the Martta Wendelin Daycare to utilise environmentally friendly solutions and climate-smart construction. This can be seen, for example, in the energy efficiency and in the way the principles of the circular economy have been taken into account both during the construction phase and in the planning of the building’s life cycle.

Thanks to its environmental friendliness, the project has been financed with green finance from MuniFin.

“Although the high-quality implementation of the daycare required a significant investment, we expect to achieve savings on the operating budget side. Combining four early education units into one makes the organization of operations more cost-effective and the maintenance of the property easier,” says Markku Vehmas, the acting Chief of Staff of the municipality.

Children and nature come first

The Martta Wendelin Daycare Centre embodies respect for the environment and sustainable development. The building has been constructed with materials that prioritise environmental friendliness and health.

“The structures of the exterior and interior walls as well as the intermediate floors have used CLT massive construction that acts as a carbon sink. The design of the spaces has focused on diversity and flexibility so that they can serve different purposes. The yard designed for play and exercise beautifully opens to the south. Part of the forest has also been left on the yard area to be preserved, as well as a stormwater puddle where children can jump to their heart’s content in rainy weather,” Sirén describes.

“The building has also not been filled with colors or artworks. The wooden surfaces create frames into which the children can bring colors,” Simons continues.

The exceptional nature of the building has brought various recognitions to the municipality. In addition to the Finlandia Prize for Architecture, the daycare centre has also won the 2023 International Award for Wood Architecture, awarded by five European architectural journals.

“I also consider the awards as a tribute to our high-quality early childhood education,” Simons states.

Most importantly, positive feedback has been received from the users of the building.

“We have received particular praise for the brightness and spaciousness of the spaces. Children love being at the daycare and enjoy themselves both indoors and in the yard activities,” Simons rejoices.

Text: Anne Laiho
Photo: The municipality of Tuusula

The final episode of 2023 in our Huomisen Talous (i.e., ”Tomorrow’s Economy”) podcast differs a little from our regular broadcasting and switches to English. MuniFin’s field covers the Finnish public sector, but our Funding team also works with a wide range of international partners and investors outside of Finland. You can learn more about the MuniFin Funding team’s work also on our YouTube channel (link).

Chief Economist Timo Vesala sits down with Senior Funding Manager Karoliina Kajova and Funding Analyst Aaro Koski to discuss MuniFin’s issuances in 2023 and what the market looked like, as well as what are the plans for next year and the Finnish economy’s current outlook. Listen to the podcast below!

This episode concludes the podcast for 2023. The podcast’s spring season starts after the holiday break: the first episode of 2024 will appear on January 23rd. Listen and follow us on Spotify, SoundCloud or on Apple’s and Google’s podcast services.

The transaction carries an annual coupon of 2.875% and was priced at mid-swaps +0bps, equivalent to a spread of 61.9bps over the OBL 1.3% due October 2027 at the time of pricing. 

The orderbook was of very high quality as nearly 60% of allocations went to banks, followed by central banks and official institutions (26%), Asset Managers (11%) and insurance and pension funds (3%). The allocations were also geographically diverse: Germany, Austria and Switzerland took 31% of the orderbook, followed by Nordics (24%), Benelux (14%), France (12%), UK (9%), rest of the world (5%), Other Europe (3%) and Asia (2%). 

“This benchmark was a great kick-start for our funding year, and we are extremely happy with the outcome. Our transaction was quickly over twice oversubscribed despite the busy start-of-the-year timing and the uncertain atmosphere at the market, which highlights the great trust placed on us by the global investor community”, says Antti Kontio, Head of Funding and Sustainability. 

This year, MuniFin plans to issue EUR 8-9 billion of long-term funding, which is in line with the new issuance volumes in 2022. 

Transaction details 

Comments from the bookrunners 

“Huge congratulations to the MuniFin team for navigating a busy January window and successfully printing their joint largest ever transaction. This transaction provides an excellent starting point for the year ahead and highlights the value investors place on MuniFin’s core currency offerings.” 

Adrien de Naurois, Managing Director, Head of DCM SSA & EMEA IG Syndicate, BofA Securities 

 “Congratulations to the MuniFin team for their stellar first benchmark issuance of 2023, successfully navigating a busy market. The high quality order book and their largest EUR benchmark since 2020 sets the scene for other Nordic issuers to follow. We are delighted to be involved in this landmark transaction.” 

Matthieu Batard, Head of SSA Syndicate, J.P. Morgan  

“A successful return to the EUR market for MuniFin with their first benchmark issuance of 2023. Despite competing supply, the deal amassed a high-quality and granular orderbook, which saw the trade tighten 2bps from initial guidance, further highlighting the strength of MuniFin’s credit quality. Congratulations to the MuniFin team on a stellar start to the year, Morgan Stanley is delighted to have been involved!” 

Ben Adubi, Head of SSA Syndicate, Morgan Stanley 

“Nordea is delighted to have played a role in MuniFin’s first EUR benchmark transaction of the year. Despite a notably congested start to the EUR primary market in January and going head-to-head with directly competing supply, MuniFin emerged with a very successful EUR 1.5bn 5-year benchmark with over twice as much final investor demand behind, while simultaneously tightening the spread by 2bps. Nordea congratulates the entire MuniFin team for kicking off 2023 with a stellar performance that highlights the strong support for its name amongst the global investor community.” 

Kamal Grossard-Amin, Managing Director, Head of SSA DCM, Nordea 

Further information 

Joakim Holmström – Executive Vice President, Capital Markets and Sustainability

+358 50 4443 638  

Antti Kontio – Head of Funding and Sustainability

+358 50 3700 285 

Karoliina Kajova – Senior Manager, Funding

+358 50 5767 707 

Lari Toppinen – Analyst, Funding

+358 50 4079 300

Read more 

MuniFin funding forecast for 2023: EUR 8-9 billion 

With the first trade on Tuesday 4 January, MuniFin was also the first SSA issuer in the NOK market this year.

– The Norwegian market has always played a significant role for us and will remain to do so. Last year a total of 5% of all long-term funding was issued in NOK, which made it the 5th largest currency, says Manager Miia Palviainen from MuniFin’s Funding and Sustainability team.

In 2022, MuniFin forecasts to issue EUR 9-10 billion of long-term funding.

– This was an excellent start for our funding year, says Palviainen.

More information

Miia Palviainen

Manager, Funding and Sustainability, MuniFin

+358 50 598 0829

– Our pilot transaction went even smoother than expected, says Manager Miia Palviainen from MuniFin’s Funding and Sustainability team.

The pilot 1-year fixed rate bond in question was RON denominated and Citigroup Global Markets Europe acted as the dealer.

– Our intention was to try out the new platform and see how it could improve our internal processes that are quite labour intensive. The platform itself is well designed and intuitive to use. Next, we will explore the API integration and remain optimistic about using the platform in future trades as well, says Palviainen.

Since Origin started developing their platform in 2015, it has gained 95 issuers and nearly 1000 active users.

– Currently, the platform is mostly for plain vanilla and callable fixed rate transactions, but we hope to see more possibilities in the future. Overall, we are happy with the test trade, Palviainen says.

Read Origin’s press release here.

More information

Miia Palviainen

Manager, Funding and Sustainability, MuniFin

+358 50 598 0829

The helpline chat serves 7–12-year-old children every day from 9 am to 10 pm. Through the chat, children can reach SOS Children’s Villages child welfare professionals as well as trained volunteers who listen to the children and help them reach local services when necessary.

Children most commonly use the chat to discuss anxiety, bullying, relationships with their friends and concerns about their parents. However, the number of contacts for serious reasons are growing at an alarming rate. On a weekly basis, children use the chat to discuss matters that the helpline adult reports to the police or child welfare services or that requires emergency social services.

The chat team leader is Johanna Virtanen, who is project manager at SOS Children’s Villages Finland and also works with support families.

“Children contact us for very different reasons. Many children come from perfectly ordinary families, but they want to discuss and go over day-to-day matters with an adult. They may need an adult to encourage them to bring the matters up with their own parents. Children also talk about their relationships with their friends and about entering puberty”, says Virtanen.

“The other group of children who contact us are children who are facing an emergency or who have experienced threatening situations for a long time. We will tell them what kind of help is available in their situation.”

“We file about three child welfare reports a week. The number would be higher if children only agreed to provide enough information about themselves. But we must remember that children use the service anonymously, and they must be able to trust that they themselves can choose how to proceed in their situation. Children’s rights safeguard children’s ability to influence matters that pertain themselves. We must respect this.”

In every discussion, the helpline adult makes a plan together with the child as to how the matter in hand might be solved.

“We thought that it would take a long time for children to learn to trust us, but children are able to share their thoughts and feelings amazingly directly and honestly. For them, the chat interaction is genuine and valuable. Based on the feedback we have received, it is important that children are heard and that someone pauses to really consider their situation”, says Virtanen.

For the chat team, working on the chat is both energising and taxing.

“The children who contact us are so smart and lovely. Unfortunately, many of them have to bear more responsibility than any child should.”

Children have contacted the Apuu chat more than 11,000 times in just a few months. The chat is intended to become a permanent helpline for young children who need help. The chat runs on donations.

This year, MuniFin donates its EUR 10,000 Christmas card fund to support the work of the Apuu chat, which is run by the SOS Children’s Villages Finland.Information about the Apuu chat has been distributed in schools, through social media influencers and as part of outreach youth work done online to actively reach children in need of help. The chat is available at apuu.fi.

– The work the MuniFin team have done has built on their strong reputation in the ESG space and has been rewarded with a huge following from sustainable investors and excellent execution. This framework and transaction sets the benchmark for other Nordic institutions to follow, comments Robert Matthews from BNP Paribas.

More than 91% of the bond was distributed to European investors. Almost one third of the bond was allocated to Germany, Austria and Switzerland and nearly one fifth to Nordic coutries. Asset managers took the largest share by representing almost half of the investors, with significant demand from SRI investors.

– The terrific invest interest did not come as a surprise for us as we see more and more investors wanting to invest in projects that support sustainable development. In 2016, we were the first green bond issuer in Finland. After being an active green bond issuer for a few years, it was time to expand the sustainable product offering to our clients and introduce social bonds to our investors. Considering our customer base of municipal and social housing sectors, expanding the sustainable product offering was a natural step for us, says Esa Kallio, the President and CEO of MuniFin.

MuniFin is a wholly public sector owned company whose sole mandate is to secure financing to the Finnish municipalities and non-profit housing organisations. It has been an active green bond issuer for four years and it is now expanding the offering into social bonds.

MuniFin’s inaugural social bond is the first of its kind issued by an SSA (Sovereigns, Suprana-tionals, Agencies) issuer in the Nordic countries.

Making the impact visible

MuniFin’s Social Bonds Framework has been drafted in accordance with the ICMA Social Bond Principles and it has three main categories: social housing, welfare and education. The Second Opinion has been provided by ISS ESG, stating that the Framework significantly contributes to four of UN’s Sustainable Development Goals.

With its new social finance product launched in the spring 2020, MuniFin aims to encourage investments that have a notably strong impact and bring about wide-ranging social benefits.

With the introduction of the social finance product, MuniFin wishes to showcase projects that are in line with the company’s view of social finance. The first financed projects include schools, hospitals and healthcare centres, and housing for people with special needs.

– Although the finance we provide can be considered already quite social in nature, we wanted to find projects that ultimately benefit the vulnerable population and address some key social challenges such as social exclusion and inequality, but also further promote Finland’s welfare state and education system, which are among the best in the world, says Antti Kontio, the Head of Funding at MuniFin.

The social finance projects are approved by the Social Evaluation Team. The team consists of external and internal social impact experts.

Further information:

Esa Kallio
President and CEO
Tel. +358 50 337 7953

Antti Kontio
Head of Funding
Tel. +358 50 3700 285

”We were positively surprised with investor demand”, says Antti Kontio, Head of Funding at MuniFin. ”The order book grew to NZD 270 million so we could have printed a larger trade but unfortunately due to our good liquidity situation we could do only NZD 150 million. We will, however, be open for taps on that line in the future. Kauri market acts as an excellent diversification tool for MuniFin in terms of currency and investor base”, Kontio says.

The new 150 million NZD Kauri is repo eligible in the Reserve Bank of New Zealand and pays an semi-annual coupon of 0.625% and was priced 46 basis points over mid-swaps and 39 basis points over the New Zealand Government bond. Bank of New Zealand (BNZ) acted as a sole lead manager.

“With seven years since the last issue, NZ investors very much appreciated the call with the MuniFin team, and were straight away interested in a transaction following it. There was a very good uptake of the transaction by real money investors, demonstrating the confidence they have in the credit”, said Mike Faville, who is leading the Capital Markets function at BNZ.

Bank of New Zealand has been running a programme to plant 100 Kauri trees for each Kauri bond issue we lead, and there are now over 10,000 trees already planted. “We really look forward to planting another 100 trees in honour of MuniFin for this transaction, to join the 100 from the last deal”, Mike Faville concludes.

Further information:

Antti Kontio
Head of Funding, MuniFin
tel. +358 50 3700285

Mike Faville
Head of Capital Markets, Bank of New Zealand
tel. +64 9 375 1391

Miko Heinilä, Kyrö Distillery Company’s Distillery Manager, has told the story so many times that he even remembers the exact date when it all started: 10 May 2012.

It was on that day that a group of friends gathered in a sauna at a rented cottage in Karjalohja and Miika Lipiäinen, who later became the CEO of Kyrö Distillery Company, suggested a whisky tasting. The men were blown away by one particular specimen – a rye whisky – and wondered aloud why no-one makes rye whisky in Finland.

“I told the others that I grew up on a farm and know how much a tonne of rye costs. I even had the perfect place in mind for a distillery”, Heinilä says.

That place was Heinilä’s hometown, Isokyrö, between Vaasa and Seinäjoki. Initially, starting a distillery in a local authority of just 4,600 people in the remote region of Ostrobothnia was just a crazy idea. It was particularly outlandish because, with the exception of Heinilä, all the others lived 250 miles away in and around Helsinki.

However, the group soon learned that Isokyrö’s old dairy, which is known for being the original home of Oltermanni cheese, could be turned into a distillery. Heinilä invited the others over and told them about Isokyrö’s history.

The men knew that many distilleries and especially those in Scotland, the world’s best known exporter of whisky, are hundreds of years old. Their whiskies already had history and a unique story. Kyrö Distillery Company had nothing except for an outlandish idea conceived in a sauna, but the history of Isokyrö had everything from mysterious human bones found in a well in Leväluhta to the Battle of Napue, the last battle of the Great Northern War.

Suddenly the idea no longer seemed that crazy.

“We can tell the history of Isokyrö and use that as a foundation for building more history”, Heinilä says.

“In a way, we are part of a bigger story.”

There was only one problem: it takes at least three years for whisky to mature in Europe. This was bad news for cashflow, and the men had to think of something else in the meantime.

Could they make gin from Finnish rye and herbs? It was worth a try.

Investing in training

Heinilä admits that the distillery’s remote location was a concern.

“Helsinki is the birthplace of most trends in Finland, and we are located physically far away from there. We were setting up a visitor centre and at the same time wondering whether anyone would actually ever visit.”

They need not have worried: both the distillery’s reputation and demand for its products shot up overnight when a gin and tonic made with Kyrö Distillery Company’s Napue Gin won first prize in the International Wine and Spirit Competition in 2015, just one year after it first went into production.

According to Heinilä, the distillery’s visitor centre, named the Kyrö Tourism Board, attracted a total of 14,000 tourists last year, more than three times the population of Isokyrö. Kyrö Distillery Company has even begun to host its own festival, Kyröfest, which takes place every year in August. The company is on a mission to make its visitor centre the most prestigious tourist destination in Finland by 2022.

The company’s main objective – making Kyrö Distillery Company the best known rye distillery in the world – has the same deadline. In practice, achieving the goal requires considerable investment in growth: the new distillery that the company has been building this year will raise its annual capacity up to 500,000 litres.

Kyrö Distillery Company employs a total of around fifty people, of whom 10 work in the company’s offices in Helsinki. According to Heinilä, having a presence in two places makes recruitment easier, but the company also puts a lot of emphasis on training its distillery workers in Isokyrö.

“I think that we have only ever hired one person who had previous experience of working in a distillery. Our priority is finding great people to join the team”, he says.

“With the right attitude and personality, anything can be learned.”

“We cannot do this alone”

Heinilä is also the chairman of the municipal council of Isokyrö, which made his new project a big talking point in the town. The fact that the company’s official name is Rye Rye Oy – which is homonymous with a Finnish phrase for drunken frolicking – and the fact that Isokyrö has a history in producing moonshine added fuel to the rumour mill.

“The chairman of the municipal council being a bootlegger was naturally a juicy story”, Heinilä says.

The locals nevertheless soon warmed to the distillery. Heinilä has endless praise for the community’s team spirit, support and open-mindedness. He also sees Isokyrö’s location between the biggest towns in Ostrobothnia and South Ostrobothnia as a major selling point. There is even an airport in Vaasa.

Isokyrö is firmly intertwined with the brand of Kyrö Distillery Company. For Heinilä, the town will always be the company’s home: there are no plans to relocate let alone sell the business.

Kyrö Distillery Company currently exports its products to a total of 33 countries. Heinilä explains that global competition in the industry is fierce. The fact that the company has a whole town standing behind it and feeling proud about the association is a huge asset.

“This is not an endeavour of five men or even a team of 50 workers. To succeed, we need everyone’s support. We cannot do this alone.”

Heinilä’s tip for aspiring entrepreneurs in other small towns is to think about the strengths of the area they come from and look for links between their idea and the region. Heinilä’s favourite kind of feedback is people telling him that the success of his crazy idea in a place like Isokyrö has inspired them to try something similar where they live.

“I cannot think of a greater achievement for a group of guys than to give someone the courage to follow their dream.”

Small and nimble

It is hardly an overstatement to say that Kyrö Distillery Company has put Isokyrö on the world map. The distillery has been featured on the BBC and in Monocle magazine, and a journalist from VICE visited the town and wrote a piece about the frozen Kyrönjoki river.

Tero Kankaanpää, Mayor of Isokyrö, is used to talk quickly turning to the distillery wherever he goes in Finland.

“The town has become famous thanks to Kyrö Distillery Company”, he says.

According to Kankaanpää, the number of tourists in Isokyrö’s traditional attractions, such as its medieval church, has also increased.

The local authority has supported Kyrö Distillery Company as best it can. Most importantly, the local authority has rezoned the town and sold more land to the growing business. The small size of the town is a benefit in this respect: it makes the local authority nimble.

“One of our strategic promises is to grant planning permission within two weeks of receiving the papers, and we have always kept that promise”, Kankaanpää says.

Kyrö Distillery Company has also applied for and been given permission to build a biogas fuelling and distribution station in the town. The company intends to use biogas to fuel its steam generator, but the station will also benefit anyone driving a biogas-powered car in the future.

“The company is therefore also bringing new services to the town”, Kankaanpää explains.

As much as Isokyrö has added to Kyrö Distillery Company’s brand, the company has also benefited the town. Its story is perfect for Isokyrö, which has made a strategic choice to promote entrepreneurship from primary school onwards.

“Businesses are imperative for the vitality of small local authorities. The competition over residents these days is bordering on silly, and to attract more people, local authorities first need to have jobs.”

Isokyrö is building its profile on the town’s team spirit and positive “craziness”. The local authority has even brought out a rear windscreen sticker that reads “You don’t have to be crazy to come to Isokyrö, but it certainly helps”.

According to Kankaanpää, local residents are embracing their reputation.

“I would definitely say that the average person from Isokyrö now has a more positive view of their hometown and its achievements, and a lot of that is thanks to Kyrö Distillery Company”, Kankaanpää says.

“People are now proud to call Isokyrö their home.”

Text: Kaisa Saario
Photos: Samuli Salo

Having suffered from indoor air quality problems, the Nopola School Centre was transformed over a period of a couple of years into a multi-purpose school that promotes modern interaction and learning together. The costs of the school project, which were funded by real-estate leasing, fell by half, thanks to careful economic planning.

This is a situation familiar to many Finnish municipalities: old school buildings built mainly in the 60s and 70s are coming to the end of their life cycle, and problems with indoor air quality are discussed in both everyday conversations and debates in the media nationwide. 

The municipality of Kyyjärvi in Central Finland was facing such a situation four years ago: multiple repair attempts had failed to resolve the issue, and the only comprehensive school in the small municipality was no longer a safe learning place for schoolchildren. In 2014 a decision was made to build a new school centre.

Right from the start, community spirit was at the heart of the school design. In the design phase, the users of the school space had their say and were carefully listened to. Kyyjärvi set to designing the school centre with great energy. 

“We wanted a school that reflected its users. Right from the outset, the idea was to build more than a traditional school, a school that had something new to offer,” says Jouko Huumarkangas, Chairman of the Municipal Board of Kyyjärvi.

However, the designs and multiple wishes escalated both the size and cost of the school.

“The result of the first design was a draft of a very traditional school whose costs were estimated at EUR 8 million,” Huumarkangas recalls.

Economic adviser to the municipality

It was time to take a step back and critically assess the municipality’s economic capacity. Municipality Finance became involved in the project at an exceptionally early stage, even before the new design was completed. The result of MuniFin’s analysis set a new framework for the school project.

“A new school centre is always a huge investment. In Kyyjärvi, the investment had grown over the years and, at a cost of EUR 8 million, would have unduly burdened Kyyjärvi’s economy. Together with the decision-makers of the Kyyjärvi municipality, we started exploring other options,” says Daniel Eriksson, Financing Manager at MuniFin.

Around the same time, the Finnish National Agency for Education released a new curriculum that emphasised functionality and learning together, giving the design of the Nopola School Centre new impetus. The premises were designed with particular attention to their multi-purpose use and utilisation also outside school hours.

“It finally felt like we were heading in the right direction. One noteworthy point taken into account was the fact that often the utilisation rate of school facilities is very low. With these things in mind, the construction firm designed a much smaller school in terms of square metres, but a functional, modern one, which can be used in a versatile way also for recreational activities. What the design lacked is the traditional labyrinthine complexity typical of school buildings,” says Huumarkangas.

In the completed solution, the square metres of the school centre are efficiently utilised with no wasted space.

“The effective use of space means that the total square metres of the school centre could be substantially reduced without endangering the functionality of the building designed for 145 students. In the end, the completed version is less than half the cost of the previous design and well aligned with the economic capacity of the Kyyjärvi municipality,” Eriksson continues.

Real-estate leasing brings flexibility to loan repayment

Similarly to the school centre, its form of funding was also non-traditional. Instead of a balance sheet loan, Kyyjärvi decided on flexible real-estate leasing. In the real-estate leasing model, MuniFin is the owner and financier of the building, also during its construction, while the municipality of Kyyjärvi leases the Nopola School Centre from MuniFin and is responsible for its maintenance.

The popularity of this model in the acquisition of social projects, such as schools and day care centres, has grown rapidly. In Kyyjärvi, this solution was favoured because of the amortisation of investment-related costs.

“We simply didn’t want to put all our eggs in one basket. For us, it made more sense to amortise costs over a longer period to avoid overburdening the economy of our small municipality,” Huumarkangas explains.

At EUR 3.5 million, the final price of the project was less than half the original estimate. How is this even possible?

“With careful calculations and analyses – numbers don’t lie. It’s also a matter of method. We take our responsibility for the sustainability of the solutions we offer very seriously. In financial leasing, the costs are distributed over a long period which means that the investment does not burden the municipality’s balance sheet, unlike when financing with a balance sheet loan,” says Janne Karaus, Development Analyst at MuniFin.

The result is no compromise

The Nopola School Centre opened its doors to the municipality’s 145 student in August. The modern school has comfortable, open spaces and rotating facilities. The teachers work in pairs and teach groups at different levels, so that each student receives instruction in accordance with their skill level. The new facilities and working methods have required some adjustment from both teachers and students, but the feedback has been very positive.

“No pain, no gain. Overall, this project has been an excellent learning experience. The entire municipality has lived and breathed this project – the Nopola school belongs to the whole municipality,” Huurmarkangas says happily.

The new school also has appeal outside the municipality of Kyyjärvi.

“We want to keep Kyyjärvi lively and dynamic and in this way create a healthy and safe place for families with children to live. I’m pleased to say we welcomed two students who are not residents of our municipality to our school this autumn,” says Huumarkangas.

Text: Heidi Penttinen
Photos: Niklas Vuorenmäki

The survey covered the Nordic municipal agencies, namely MuniFin and its counterparties Kommuninvest of Sweden, KBN of Norway and KommuneKredit of Denmark. The Nordic agencies were also compared to other European issuers such as the German KfW, the Dutch BNG Bank, European Investment Bank and Nordic Investment Bank.

– The distributors clearly feel these issuers have credit stories that are relatively similar and all these issuers receive great feedback. However, there are also differences in profiles, says Hanna Helgesson of Prospera.

Strong Finnish economy increase investor interest in MuniFin

The respondents of the survey felt that the insecurities related to other parts of Europe have increased investor interest in MuniFin. Investors have also noticed that the Finnish economy has been picking up pace in the past couple of years.  

MuniFin as a company is recognised by the distributors for its activity in the green bonds market. Some of the respondents also mentioned that social bonds would further increase their interest in the MuniFin securities. Also issuing more benchmark loans was on the distributor wish list.

– MuniFin has a diverse funding strategy which caters for a wide range of investors. They have been able to stay at the forefront of each market, constantly adapting to investor needs. Participation at various events helps them to stay close to their investors and maintain this flexibility in the funding. This is welcomed by the investors, commented one of the respondents.

Survey helps to improve MuniFin’s funding operations

The Prospera survey defines MuniFin as a company with a very professional operation model. MuniFin’s strengths are its funding strategy, clear and consistent way of acting, transparency, information and its perceptiveness to market demands. All these have had a central role in the development of the company’s funding operations in the past years.

– Each year we go through the feedback from the Prospera survey in great detail. Awards we have been given in the recent years are a good indicator we’re on the right path, but the Prospera survey offers us more concrete ideas on how to improve our way of working. It also gives our partners a chance to give constructive feedback, says Joakim Holmström, Executive Vice President and the Head of Capital Markets at MuniFin.

Facts about the survey

Prospera has surveyed North European issuers every year since 2011. The Swedish Kommuninvest was the first company to mandate the survey but MuniFin has for several years been the other assigner of the survey.

Prospera is part of a global research group Kantar Sifo and it specialises in the finance sector research. Its services range from tailored surveys like the one in question but also sector wide market research conducted at its own initiative.

This survey was conducted by 22 phone interviews with international distributors. The respondents were pre-determined as it is essential that the respondents are familiar with the agencies they were asked to review and rate.

The paper has been developed by a working group comprising public sector green bond issuers from the four Nordic countries Denmark, Finland, Norway and Sweden. They include the local government funding agencies Kommunalbanken (Norway), Kommuninvest (Sweden) and MuniFin (Finland); the Swedish Export Credit Corporation (SEK); and six Swedish municipal or regional issuers including City of Gothenburg, the municipalities of Lund, Norrköping and Örebro, Region Skåne and Stockholm County Council. Denmark’s municipal lending agency KommuneKredit has been part of the working group but intends to comply at a later stage.

The idea of a harmonised approach to impact reporting came up as Kommuninvest prepared its reporting after launching its debut green bond in 2016. Realising that there would be benefits both to issuers and to investors from a harmonisation of impact reporting efforts, Kommuninvest initiated a working group together with other Nordic issuers.

– What characterises Nordic public sector issuers of green bonds is that we finance projects across a range of categories and sizes, and that we have a limited number of people available to work with environmental reporting. There are some guidelines on impact reporting available in the market today, but we felt a degree of tailoring to regional market and portfolio characteristics were necessary to deliver meaningful reporting, says Björn Bergstrand, Head of Sustainability at Kommuninvest.

– Through this group harmonisation initiative, we ensure transparency and consistency in reporting from the Nordic public sector green bond market. We hope this guide will be useful to other green bond issuers in the Nordic region as well as in other geographies, and to the investor community. We believe it raises the bar for green bonds impact reporting, and we encourage other issuers to build on this so that the market may continue to advance, says Bergstrand.

The paper proposes an outline for reporting environmental benefits of green bond investments. It provides guidance on general matters such as to report on actual impact when feasible, to distinguish between reduced and avoided emissions, and to report impact in relation to the share financed by green bonds. The paper also recommends issuers to report impact in relation to amounts disbursed and outstanding, as opposed to amounts committed.

– This means that if disbursements to a project are made gradually, environmental impact will also be taken into account gradually. Amortisations will gradually reduce the issuer’s reported environmental impact of a project, but will free up capacity to finance new projects, says Bergstrand.

The paper furthermore provides suggestions for metrics and indicators relevant to eight different project categories. This effort builds upon reporting approaches suggested by the Green Bond Principles and multilateral development banks, but adds indicators for categories such as clean transportation and green buildings, that have previously not been addressed.

As a first step toward approaching social impact, the paper includes a few social impact indicators on a ‘nice to have’ basis.

The paper has benefited from input from CICERO Center for International Climate Research, the Nordic Investment Bank, SEB, and Crédit Agricole CIB as well as several investors throughout the process.

The issuer group intends to manage the position paper as a live document, to be updated on a regular basis. The group encourages feedback and will seek to develop its methodology to provide as relevant and appropriate impact reporting as possible. Events to introduce the paper to issuers and investors are planned for a number of cities, with Frankfurt, London, Paris and Stockholm confirmed at time of the launch.

The position paper will be available for download on the signatories’ web pages such as www.munifin.fi, www.kommuninvest.org and www.kommunalbanken.no from 18.00 hrs CET on October 24, 2017.

Comment from Chris Wigley, Senior Portfolio Manager, Mirova:

– This new paper on impact reporting is in tune with the current movement towards greater transparency. It is thoughtful and innovative, and advances research in this field to yet another milestone.

Comment from Christa Clapp, Research Director of Climate Finance, CICERO:

– This impact reporting initiative is impressive, timely and highly welcome. It will clearly facilitate a harmonisation of impact reports in the green bond market. It will also hopefully trigger discussions on how to present impacts to investors when these are not easy to assess.

Comment from Ulf Erlandsson, Senior Portfolio Manager, Strukturinvest Fondkommission:

– We think the Nordic public sector issuers’ position paper is a very effective document for lowering the barriers to issue green bonds. Alignment of green metrics, such as those suggested in this document, also greatly simplifies the green due diligence required for investors to invest.

Comment from Tanquy Claquin, Head of Sustainable Banking, Crédit Agricole CIB:

– Transparency, reliability and consistency of data are critical to further expand the green bond market and sustainable finance in general. In this respect, this Nordic public sector issuers’ initiative is tremendously helpful. It will serve issuers, well outside of the group signatories, and contribute to better practices and exemplarity in the market in general.

Comment from Christopher Flensburg, Head of Climate & Sustainable Financial Solutions, SEB:

– This position paper is an important milestone in securing a better dialogue and enables investors to understand the impact of their investments. It is initiatives like this which will allow finance to proactively contribute to building sustainable societies.

Further information:

Kommuninvest (Secretariat for Position Paper and main contact for questions & comments)
Björn Bergstrand, Head of Sustainability and Senior Investor Relations Manager, +46 708 86 94 76, e-mail: bjorn.bergstrand(at)kommuninvest.se

Kommunalbanken
Sigbjørn Birkeland, Chief Financial Markets Officer, +47 934 80 893, e-mail: sib(at)kbn.org

MuniFin
Antti Kontio, Head of Corporate Responsibility and Manager, Funding, + 358 9 6803 5634, e-mail: antti.kontio(at)munifin.fi

Stockholm County Council
Frida Korneliusson, CEO, Treasury of Stockholm County Council, + 46 707 37 44 20 e-mail: frida.korneliusson(at)sll.se