Presentation for the "Third roundtable on Financing Water", by Christopher Kaminker

1. Update on Water Finance
Debt Capital Markets
Christopher R. Kaminker, PhD
Senior Advisor, Head of Research
Climate & Sustainable Finance, SEB
christopher.kaminker@seb.se
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2. A decade of Green Bonds

3. Creating a Green Bond Framework according to The Green Bond Principles
International Market Practice and Investor Expectations
The five pillars Considerations
Use of proceeds
 Strict criteria vs. strong governance
 How to navigate through requirements for strong governance
 What kind of technologies can be considered Green?
 New financing vs. refinancing
Process for
project evaluation
and selection
 How to pool internal competence around green
 Implementation of Green financing into existing infrastructure
 How to secure ongoing monitoring
Management of
proceeds
 How to earmark or otherwise track the Green Bond proceeds
 What are the options for financial institutions
 How to utilise existing infrastructure to secure traceability of Green Bond proceeds
Reporting
 Decide on format
 What impact parameters can be relevant for a specific Green Bond portfolio
 Efforts to develop further impact reporting
Assurance through
independent
external review
 SEB will manage the second opinion process
 SEB will provide support to the issuer through the second opinion process
SEB acted as Joint Green
Structuring Advisor on HSBCs Green
Bond framework and CICERO
second opinion
 The green bond framework consists of five pillars (definition, selection, traceability, reporting, external review)
 SEB will actively support the issuer through its internal implementation process drawing on experience providing
increased efficiency to processes (see table below)
Second Opinion on
KfW's Green Bond Framework
SEB acted as Green Structuring Advisor
on KfWs Green Bond framework and
CICERO second opinion
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4. Why Green Bonds? Broadly endorsed by global leaders
 ”For investors, green bond markets offer a stable, rated and liquid
investment with long duration. For issuers, green bonds are a way to tap
the huge US$100 trillion pool of patient private capital managed by global
institutional fixed-income investors.”
 “The development of this new global asset class is an opportunity to
advance a low carbon future while raising global investment and spurring
growth.”
Mark Carney
Governor of the Bank of England
Chairman of the Financial Stability Board
Source: "Resolving the climate paradox - speech by Mark Carney" given at the Arthur
Burns Memorial Lecture, Berlin (2016)
https://www.bankofengland.co.uk/speech/2016/resolving-the-climate-paradox

5. USD 525 bn in 10 Years
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6. 6

7. Green bond market to move sideways in 2018
A year of healthy consolidation
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8. Global Green Bond Market by Sector, Yield and Maturity
Note: Excludes project bonds, ABS and US Municipal
Source: SEB analysis using Bloomberg BVAL pricing (Sept 21, 2018)
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9. Green Bond Reporting: Use of Proceeds
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10. Green bonds and water financing
Over USD 170bn of issuance where water identified ex ante as use of proceeds in green bond framework
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Green bonds and water financing
Over USD 170bn of issuance where water identified ex ante as use of proceeds in green bond framework

12. 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017 2018
YTD
Green
91%
Sustainability
6%
Social
3%
USD 579 billion Sustainable Bond Market
Green dominates, but Sustainability and Social Bonds taking off since launch of the
Social Bond Principles and Sustainability Bond Guidelines in 2017
0
20
40
60
80
100
120
140
160
180
200
2010 2011 2012 2013 2014 2015 2016 2017 2018
YTD
Green Sustainability Social
Sustainable Bond issuance by type (USD Bn) Sustainable Bond issuance by type (% Share)
Sustainable Bond
Cumulative Issuance
USD 526 bn
USD 20 bn
USD 33 bn
Source: SEB analysis based on Bloomberg and SEB data (7 November 2018) * Note: 2018 figures are likely to be revised upwards as undiscoverable US Muni, Chinese ABS/MBS, project bonds and private placements are catalogued
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14. 14

15. European Investment Bank
Key Terms
EUR 500m Inaugural Sustainability Awareness Bond
Transaction Overview
About European Investment Bank
 Owned by the 28 Member States of the European Union (EU), the European Investment Bank (EIB)
is the EU's long-term lending institution. As a public bank with objectives driven by EU-policies, its
leading priority is to promote Europeaneconomic development and integration.
 Sustainability Awareness Bonds (SABs) complement EIB Climate Awareness Bonds (CABs) by
extending the same approach from climate to further areas of environmental and social
sustainability. The proceeds of this Bond will be allocated to EIB’s lending activities contributing to
sustainability objectives in line with EU legislation, e.g. those included in the Proposal at this stage:
• sustainable use and protection of water and marine resources;
• transition to a circular economy, waste preventionand recycling;
• pollution prevention and control;
• protection of healthy ecosystems
Transaction Rationale and highlights
 On 6th of September, SEB acted as joint lead manager when EIB successfully issued it’s inaugural
EUR denominated8-year Sustainability Awareness Bond.
 The EUR 500m 8 year fixed rate SAB transaction was jointly led by Bank of America Merrill Lynch,
Crédit Agricole, Commerzbank, SEB and UniCredit.
 The transaction follows an extensive road show in which SEB held investor meetings and an
investor lunch in Stockholm on 23rd September where EIB presented their new Sustainable
Awareness Bond.
Transaction Process
 The mandate was announced at 18:05 CET on September 5th, with indication that the transaction
would be launched in the near future. On September 6th books opened at 09:06 CET with guidance
at MS – 18 area and size EUR 500m, no grow. The orderbook quickly gained momentum and the
first book update came at 10:23 CET with books above EUR 700m and guidance still at MS -18
area. Continued support from investors allowed EIB to tighten the spread to MS -19a at 10:55 CET
while books had grown to above EUR 950m. Final terms was announced at 11:14 CET with the
spread set at MS -20bps and orderbooks above EUR 1.1bn, the orderbooks closed at 11:30 CET.
Distribution Statistics
 Over 50 investors participated in the transaction and around 2/3 of the allocation went to SRI
accounts. The orderbook consisted of investors from 28% Benelux, 21% Nordics, 18% Asia, 13%
Germany/Austria, 13% UK, 3% Italy, 3% France and 1% Other. In terms of Investor type; 33%
Pension/Insurance, 33% Banks, 18% Central banks/Official institutions and 16% Fund managers.
EUR 500m
Due May 2026
Sustainable Awareness Bond
Joint lead manager
Issuer European Investment Bank
Status Senior unsecured
Instrument Rating Aaa / AAA / AAA (Moody’s / S&P / Fitch)
Nominal Amount EUR 500 million
Documentation EMTN Programme
Trade Date 6 September 2018
Settlement Date 13 September 2018
Maturity Date 15 May 2026
Coupon Fixed 0.375%, Annually
Coupon payment
days
15 May each year, short first coupon from 13 September
2018
Re-offer Price 99.474%
Re-offer Spread MS - 20bps
Reference
Benchmark
DBR 0.5% 02/2026
Re-offer Spread vs
Reference Bmark
+ 37bps
Denominations EUR 1k
Listing Luxembourg Stock Exchange’s Regulated Market
Law Luxembourg
Investor Allocation: Geography
Investor Allocation – Type
Benelux 28%
Nordics 21%
Asia 18%
Germany /
Austria 13%
UK 13%
Italy 3%
France 3%
Other 1%
Pension/I
nsurance
33%
Banks
33%
CB/OI
18%
Fund
Manager
16%

16. Broader bond universe: Water sector accounts for 8% (USD 101 bn) of environmentally-
aligned universe, or. Labelled green bonds with proceeds allocated only to water represent
USD 17bn. 81% are unlabelled bonds issued from fully-aligned issuers (USD81bn)
and 2% from strongly-aligned issuers (USD1.7bn).
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Source: Climate Bonds Initiative

17. S&P found 717 ratings over last 2 years where
environment and climate risks were a material
factor in the analysis and 106 where these led
directly to a rating action
Findings
S&P look-back study of environmental risks on bond ratings
The materiality of water-related risk
Source: S&P (2018)
Downgrade;
41%
CreditWatch
negative; 4%
Outlook to
negative; 8%
Outlook to
stable from
positive; 3%
Outlook to
stable from
negative; 10%
Outlook to
positive; 10%
CreditWatch
positive; 5%
Upgrade; 19%
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Downgrade
49%
CreditWatc
h negative
4%
Outlook to
negative
from stable
11%
Outlook to
stable from
positive
7%
Outlook to
positive
4%
Upgrade
25%
S&P found 169 ratings over last 2 years where
water risks were a material factor in the analysis
and 28 where these led directly to a rating action

18. SEB Impact Metric Portfolio Tool
A new scalable quantitative model to measure impact
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