Entra gains foreign debt investors, ‘comfortable’ with debt position

By Devika Patel

Knoxville, Tenn., July 12 – Entra ASA management said that the company has a “comfortable” debt position and that its green bonds are selling well both in the primary and secondary markets, especially with foreign investors.

“Interestingly, we do see now that, especially the green bonds, the foreign investors taking that bond is increasing,” chief financial officer Anders Olstad said on the company’s second quarter earnings conference call on Wednesday.

“So in the first green bond that we did, in the third quarter last year, [are held by] almost 50% now of foreign investors.

“That’s something we haven’t seen in our other bonds and also the pricing in the secondary market for these green bonds seem to be quite good.

“So we do see a very high interest in our green bonds and we do expect that future bonds that we will issue will also probably be along the same line as the green bonds,” he said.

Olstad said that in the second quarter the company completed a NOK 250 million tap of a NOK 750 million green bond issued in the first quarter.

“[The] bond market is favorable,” he said.

“We just did a tap on the NOK 250 million.

“That was the second green bond that we issued in the first quarter of NOK 750 million.

“We did another tap now in the second quarter.

“The first one was done at Nibor three months plus 86 basis points and the tap was done at Nibor three months plus 84, 85 basis points.

“So [we] still [have] favorable and very good financing.

“That was also a seven-year,” Olstad said.

Interest costs ‘flat-ish’

Olstad stated that the company’s financials are stable and that the financial costs are relatively unchanged.

“Financials are pretty stable,” Olstad said.

“Debt has increased by some NOK 2.4 billion since last year, but the average interest has come down by some 30, 34 basis points, so all in all, the financial costs are pretty flat-ish,” he said.

Olstad said that the balance sheet is growing and is “stable” and “solid.”

“[The] balance sheet – it’s really nothing changed since the last time we spoke.

“It keeps on growing.

“It’s stable and it’s solid,” Olstad said.

He said that the company has decreased its debt, retiring a bond, and that the company’s bond exposure has gone down.

“On the financing activity – it’s been another interesting quarter.

“We’ve taken down the debt about NOK 400 million and we changed the mix somewhat.

“We retired a bond.

“Overall, our exposure to bonds is somewhat down.

The company has also decreased its bank debt, bringing gross debt down by NOK 44 million.

“We’ve taken down the bank debt somewhat,” Olstad said.

“So, all in all, gross debt is down by NOK 44 million,” he said.

Olstad noted that the financing markets are favorable.

“In terms of the financing market, it’s still favorable.

“The bank market is still open.

“The banks have different appetites, both in terms of maturities and interest rate.

“They want to lend us money that we can draw and also that we keep, unutilized, and we try to accommodate those banks and get a good fit into our debt portfolio,” he said.

Olstad said that the company maintains a NOK 4.8 billion cushion of undrawn credit facilities.

“Net debt is about NOK 17.5 billion,” he said.

“We still maintain quite a cushion in terms of unutilized or undrawn RCFs [revolving credit facilities] of NOK 4.8 billion.

“We like to have that cushion and safety, especially with such a large gross paper portfolio,” he said.

Olstad stated that the company’s management, despite Entra’s hefty share of market-based debt, is “comfortable” with its debt position.

“We maintain a quite hefty weight on the market-based debt – 78% bonds and commercial papers and the remaining part in bank facilities.

“So, all in all, [we have] quite favorable financing markets and we’re comfortable with our debt position as it is,” Olstad said.

On March 15, the company priced NOK 750 million of seven-year green bonds with a coupon of Nibor plus 86 basis points.

On May 9, Entra priced another NOK 250 million of green bonds due 2024, bringing the total deal size to NOK 1 billion.

The issue price for the add-on was 100.147, which amounts to an issue spread of Nibor plus 84 basis points.

Proceeds have been earmarked to fund a pool of properties and projects with high environmental standards and a certification from Breeam with a minimum certification of “excellent.”

DNB, SEB and Swedbank were lead arrangers.

Entra’s green bond framework has a highest “dark green” rating from independent research organization Centre for International Climate and Environmental Research Oslo (Cicero).

Entra is a real estate company based in Oslo.

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