The European Union introduced on Tuesday a Swedish version of its climate awareness bonds worth 2.25 billion Swedish kronor ($318 million) dedicated for the bank’s Scandinavian investors.

The European Investment Bank has earmarked one tranche amounting to 1.7 billion Swedish kronor to have a fixed rate that will pay an annual coupon of 2.95 percent, or 33 basis points over the interpolated government bond curve.

Meanwhile, the 550 million Swedish kronor with floating rate tranche will pay a quarterly coupon of three-month Stockholm Interbank Offered Rate plus 10 basis points.

Both bond types with fixed and floating rates will mature in February 17, 2015.

The investment bank said proceeds from the issues will be used to back up projects on renewable energy and energy efficiency in support of climate protection. It intends to use funds it will raise in the bond issue to bankroll future projects in these areas.

Sweden, which currently holds the E.U.’s rotating presidency, made climate protection a key priority during its six-month term.

Bertrand de Mazières, the bank’s director general of finance, noted that initial 600 million euro ($887 million) climate bonds issue in 2007 have been used up, making the follow-on offer timely.

“The bonds offer a unique opportunity for investors to actively make ‘a green investment’ while at the same time enjoying a higher return than through corresponding government bonds with the same high AAA/Aaa rating,” said Michael Wolf, chief executive of Swedbank, lead manager for the bond issue and a leading Nordic-Baltic banking group.

Rating agencies Moody’s, Standard and Poor’s and Fitch have given the issue their highest grade.

The 27-nation bloc’s investment bank has financed renewable energy projects worth over 6 billion euros over the last five years. It aims to allocate at least 20 percent of its energy projects portfolio to renewable sectors across the E.U.

The bank allots 10 billion euros annually to energy-related projects. Projects which could win bank financing from the proceeds of the bonds should be in renewable energy generation through wind, hydro, solar and geothermal power, as well as in the area of energy efficiency such as district heating, cogeneration, building insulation, energy loss reduction in transmission and equipment replacement with a minimum 20 percent energy efficiency improvement component.

-   Sef Cagoco