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1.Background
Table of contents
• Our experience with green bonds
• Use of proceeds
• Project selection
• Investor reporting
•
Second opinion
5
7
8
10
12
2.Current status
•
Current status
•
Next green bond transaction
•
Benefits for investors & City of Gothenburg
•
Possible green projects
14
15
16
18
• Financial information about the City of Gothenburg 24 3.Annex
3

1.Background
Table of contents
• Our experience with green bonds
• Use of proceeds
• Project selection
• Investor reporting
•
Second opinion
5
7
8
10
12
2.Current status
•
Current status
•
Next green bond transaction
•
Benefits for investors & City of Gothenburg
•
Possible green projects
14
15
16
18
• Financial information about the City of Gothenburg 24 3.Annex
4

5

City of Gothenburg first city in the world to issue green bond
City of Gothenburg first in Nordics to issue green bond
According to the World Bank framework
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Lackarebäck water treatment and purification filters
Electric cars GoBiGas
Existing Stage 1 ( annex North ) keeps the works being completed , while installation / mounting of the VA process equipment (pipes , pumps, carbon filters and ultrafilters ) continues until mid-
2014. After that the commissioning of the new processing plant parts. In Stage 2 ( annex South) is the concrete foundation to be erected . The new standby power and switchgear building is completed and commissioned . Construction works is broadly on schedule – with the commissioning of Stage 1 in December
2014 and Phase 2 in October 2015.
Impacts:
• Capacity increase by 40 %
• Socioeconomic gains in terms of lower disease outbreaks which saves up to
290.000 days in productivity loss between 2014-2038
• Socioeconomic gains in terms of cost
Introduction of electric vehicles is the focus of
Gatubolaget. In 2013, the company delivered electric car # 100 to the city committee in
Angered. Thus, the City Council’s goal of 100 electric vehicles in the city by 2015 have already been fulfilled. In connection with the introduction of electric cars, Gatubolaget has got four quick charger for electric cars, the last of those coming into place in 2014.
Gatubolaget believes there is scope to change most of the city’s passenger car fleet to electric cars.
Impacts:
• reduced use of fossil fuels
GoBiGas project aims to gasify wood raw material for the production of biogas that will be distributed at existing gas grid . The project is divided into two stages with a demonstration plant as the first stage and then a commercial facility that second stage . The first phase is designed to produce 160 GWh / year , equivalent to fuel to about 16 000 cars in years , and the second phase is scheduled to produce 640 to
800 GWh / year. The project is run in close collaboration with both academia ( Chalmers ) and suppliers ( Valmet on Lundbystrand ,
Gothenburg).
For GoBiGas project ’s first phase started excavation work in 2011 and installation in 2012.
The facility is now completed and commissioning is underway. In 2014 , the plan is to get the demonstration plant in continuous operation for evaluating technology choices , function and performance . In parallel with the execution, a major focus was placed on participation in various fora to improve the economic conditions for the production of biogas.
300 mkr
Impacts: savings of 1.4 million hospital days
30 mkr
When the plant is in full production, delivery will be 800 – 1 000 GWh, equivalent to fuel for between 80,000 to 100,000 cars.
150 mkr
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City
Council
Final
Approval
Treasury
Departmen t
City of
Gothenburg
Selection
Process
Policies &
Guidelines
Environmental
Department
Treasury and Environment Departments work side-by-side in project selection process, thus uniting the two areas in a way it hasn’t been done before
.
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• mitigation of climate change, including investments in lowcarbon and clean technologies, such as energy efficiency and renewable energy programs and projects
• adaptation to climate change, including investments in climate-resilient growth
• to a smaller extent (max
20%) projects which are related to a sustainable environment rather than directly climate related
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• Annual investor letter
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•

Regular investor letter
City of Gothenburg is committed to provide an annual investor letter which will be available on City of
Gothenburg’s website. The investor letter will include a general summary of City of Gothenburg’s Green Bond development, a list of projects and a selection of project examples.
Earmarked account
An amount equal to the net proceeds of the issue of the Notes will be credited to a special Budget account that will support the City of
Gothenburg’s lending for Eligible Projects. So long as the Notes are outstanding and the special account has a positive balance, at the end of every fiscal quarter, funds will be deducted from the special account and added to the City of
Gothenburg’s lending pool in an amount equal to all disbursements from that pool made during such quarter in respect of Eligible Projects.
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 Independent Research Center associated with University of Oslo
 CICERO conducts research on and provides information and advice about national and international issues related to climate change and climate policy
“What’s considered green is different for everyone. Our investors need to be comfortable…reaching out to Cicero is a great first step.”
-Stephen Liberatore, Managing Director at pension provider TIAA-Cref
“On behalf of our investors, we ask for a second opinion from an environmental specialist called CICERO…we wanted to be sure that the right questions were asked...we also wanted to make sure that the independence of the group that was raising the questions was secure.”
-Christopher Flensborg, Head of Sustainable Products and Product Development, SEB
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1.Background
Table of contents
• Our experience with green bonds
• Use of proceeds
• Project selection
• Investor reporting
•
Second opinion
5
7
8
10
12
2.Current status
•
Current status
•
Next green bond transaction
•
Benefits for investors & City of Gothenburg
•
Possible green projects
14
15
16
18
• Financial information about the City of Gothenburg 24 3.Annex
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 New, extended green bond framework
 Framework linked to the City’s environmental programme
 Projects selected in accordance with long-term environment goals
 5 billion SEK
 Continuity on the green bond market
 One green transaction every year
• Transaction subject to market conditions and internal supply of projects
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•
•
•
•
•
• Transaction is subject to market conditions
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•
City of Gothenburg Green Bonds support mitigation and adaptation projects selected according to the framework
• Investors have an opportunity to invest in local renewable energy, biogas, smart grids, and much more
•
Investors benefit from AA+/Aaa City of Gothenburg rating and the City’s “due diligence” for projects
•
Investors are offered market return – no premium charged for the “ green element ”
• Project that might be funded through this green bond issue are listed on next slides
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• Diversify investor base for City of
Gothenburg funding
• Create awareness about:
• City of Gothenburg
• City’s climate efforts
• climate change and the need for actions in all sectors
• Bringing together environment and finance departments internally in organization for better understanding of each others’ needs for future collaborations
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Reduced Climate
Impact
Good-Quality
Groundwater
A Good Build
Environment
Clean Air Natural
Acidification
Only
A Balanced
Marine
Environment
Zero
Eutrophication
Flourishing
Lakes
And Streams
Sustainable
Forests
A Rich
Diversity of
Plant and
Animal Life
A Non-Toxic
Environment
A Varied Agricultural
Landscape and
Thriving Wetlands
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1
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• Quiet, emission-free, fuel-efficient electric buses from Volvo
• Electric buss line between Johanneberg
Science Park and Lindholmen Science Park
• Project includes future stop solutions, ITS solutions, security concepts, green depot and energy Solutions
• Testing and demonstrating new ways to use public transport
•
Start 2015
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•
•
•
•
•
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• ”Westra pier”electrical efficiency
• Teknikcollege Lindholmen- Environmentally certified building
• Inre sannegårde - disposal
• Kajskjul 113- Energy efficiency, waste management, water.
• Climate Improvement Program 141: an - Energy efficiency.
• Lindholmshamnen and housing Götaverksgatan bk 10.7 million - Urban planning, waste management, energy efficiency, water supply.
• Disposal plant at Western Eriksbergsvägen-Disposal.
• Stop for electric bus - Transport.
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• Gryaab’s nitrogen treatment
• Post-denitrification project
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1.Background
Table of contents
• Our experience with green bonds
• Use of proceeds
• Project selection
• Investor reporting
•
Second opinion
5
7
8
10
12
2.Current status
•
Current status
•
Next green bond transaction
•
Benefits for investors & City of Gothenburg
•
Possible green projects
14
15
16
18
• Financial information about the City of Gothenburg 24 3.Annex
23

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Key characteristics
Employees
Inhabitants
Size
Turnover
Debt portfolio
Ratings
48 000
526 054
Second largest city in Sweden
SEK 48,0 bn
SEK 38,6 bn
Aaa (2006) / AA+ (2007)
City of Gothenburg
In brief
Sweden
Major Sectors
Large companies
Machinery, Automotive, Shipping and
Pharmaceuticals
Volvo Cars, Volvo Trucks, SKF, Ericsson,
Astrazeneca, SCA Hygiene Products, Stena
Groupe
City of
Gothenburg
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The municipalities are legally or contractually responsible for example:
 Childcare and preschools
 Primary and secondary education
 Care of the elderly and disabled
 Social services
 Water supply and sewerage
 Infrastructure, traffic, public transport
 Plan and environmental issues
 Rescue services and emergency preparedness.
Other services provided on a voluntary basis include for example:
 Culture and Leisure services
 Housing
 Industrial and commercial services.
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Financial infrastructure
City of Gothenburg Framework
EMTN EUR 3000M
Green Bonds
CP
ECP
Credit facilities
Kommuninvest
Framtiden
MTN
CP
Bank loans
SEK 2000M
SEK 3000M
USD 500M
SEK 9000m
-
-
Framework
SEK 10000M
SEK 4000M
Outstanding
EUR 2000M
-
SEK 500M
-
-
SEK 1300m
Outstanding
SEK 6200M
SEK 2700M
SEK 5200M
Debt portfolio
SEK 21.8bn /USD 3.3bn equivalent
Kommuninvest; 1,3
Others; 1
EIB; 3,9
Framtiden; 14,5
EMTN; 17,9
Total 38,6 SEK bn
7
6
5
4
3
2
1
0
10
9
8
Group maturity profile(SEKbn)
Framtiden Staden
2014 2015 2016 2017 2018 2019 2020 2021 >2021
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Public ratings
Standard & Poor’s and Moody’s
AA+
AA+ since 2007, stable outlook
 Predictable and supportive institutional framework
 Dynamic local economy with solid growth prospects
 Very positive financial management
 Sound budgetary flexibility due to a high share of modifiable revenues
 Robust liquidity position
÷ Increasing deficits after capital accounts, owing to higher investments.
÷ Potential risks in an adverse scenario, given the very large, albeit mainly self-supporting, group of municipal companies.
Release calendar for rating reports:
• March 21
• September 19
AAA
AAA since 2006, stable outlook
 Track record of balanced budgets
 Rigorous budget controls
 Solid financial position with a very low, though increasing net debt burden as the bulk of the city’s debt is related to what to date have been on aggregate self-supporting companies
Downside risks
÷ A loosening of the prudent budget discipline, resulting in a large increase of expenditures, and negative operating margins in combination with a high level of debt-financed investments could put pressure on the rating.
÷ Significant weakening of the importance of local government and consensus with the central government, regarding the delivery of public services, or a downgrade of the sovereign rating could place the rating under pressure.
Release calendar for rating reports:
• August 15
• December 12
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Bonds or CP?
Green Bond
May/June
2014
Autumn
2014
March 2014
CHF, EUR,
USD?
SEK 1.7 mdr
Redemptions 200 mkr
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Göteborgs
Stadshus AB
Internal service companies
Gatubolaget
Upphandlingsbolag et
Göta Lejon
Kommunleasing
European Office
Temporary
Boplats
Regional companies
Renova
Gryaab
Grefab
Göteborg Energi
Gbg Energi Nät FordonsGas
Partille Energi Lerum Energi
Falbygdens
Energi
Ale Energi
Svenska
EnergiAskor
Skövde Biogas
Gbg Energi
Gasnät
Sörred Energi
GoBiGas
Lidköping
Biogas
Gbg Energi
DinEl
Gastekniskt
Center
Sävsjö Biogas
EFO
Gbg Energi
Backa
Framtiden
Poseidon
Familjebostäder
Gårdstensbost.
Bostadsbolaget
Egnahem
Rysåsens fastigh.
Störningsjouren
Älvab
HIGAB
Scandinavium
Göteborgslokaler
Parkeringsbolaget
BRG
Lindholmen ScP
Johanneberg
ScP
Gbg Tekninska
College
Cityflygplatsen i
Gbg
UNO
Gbg & Co
Kommunintresse nt
Gbg & Co
Träffpunkt
Got Event
Liseberg
Stadsteatern
Gbg Hamn
Scanport
Insurance
Gbg Stuveri
Scandinavia n Distripoint
Gbg Port
Operation
Gbg
Spårvägar
Buss
Trafikantservice
Spårvagn
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Spending – City Of Gothenburg
Structure of public sector spending
City of Gothenburg
Key focus areas
 Healthcare
 Childcare
 Municipal housing
 Care for the elderly and disabled
 Schooling for children and youth
 Law, order and security
 Sanitation and waste management
 Energy supply
 Water supply and sweage
 Construction issues
 Infrastructure
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Central Government
30% of public sector spending
Local Government
70% of public sector spending
International Debt
Markets
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According to the Swedish Bankruptcy Act a local government cannot be declared bankrupt since they do not fulfil the criteria of being insolvent. This is due to the fact that the local governments have the constitutional right to levy taxes. The
Swedish Court has stated that the local governments in Sweden are not covered by the Bankruptcy Act. (RH 1996:75). This view is supported by the Swedish legal doctrine.
Requirement for sound financial management
Balanced budget requirement
Local government financing principle
Financial equalisation
 Local governments must work according to a sound financial management
 Law: “Kommunallagen chap. 8 §2(1991:900)”
 Annual local government budgets should normally be in balance, imbalances must be restored within 3 years
 If the government alters the tasks of local governments, the governments must also neutralise their financial effect
 Law: “Kommunallagen chap. 8 §4-5 (1991:900)”
 Approved by the government and in force since 1972.
 Imbalances between local governments are equalised annually through income and cost equalisation schemes
 Law: “Lagen (2004:773) om kommunalkekonomisk utjämning
Financial prudence explains Sweden’s strong public finances and low levels of public debt
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http://finans.goteborg.se
Link
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Mr. Magnus Borelius
Head of Group Treasury
Tel: +46 31 368 00 23 magnus.borelius@stadshuset.goteborg.se
se.linkedin.com/in/magnusborelius
Mr. Danijel Afolter
Portfolio Manager
Tel: +46 31 368 06 04 danijel.afolter@stadshuset.goteborg.se
se.linkedin.com/in/dafolter
Ms. Frida Svensson
Portfolio Manager
Tel: +46 31 368 04 67 frida.svensson@stadshuset.goteborg.se
http://finans.goteborg.se Bloomberg ticker: GOTA Govt 3
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