Krišjānis Bušs, COBALT Senior Associate
Each year, a growing number of companies choose to raise capital through bond issuance in the capital markets. On the Nasdaq Baltic stock exchanges, it is becoming increasingly common to see bonds marked with identifiers (such as a green leaf or a shield symbol) indicating the type of bond. Selecting the right bond structure is important, as it not only determines how the proceeds may be used but also affects the coupon rate which is a key consideration for both issuers and investors.
Each year, a growing number of companies choose to raise capital through bond issuance in the capital markets. On the Nasdaq Baltic stock exchanges, it is becoming increasingly common to see bonds marked with identifiers (such as a green leaf or a shield symbol) indicating the type of bond. Selecting the right bond structure is important, as it not only determines how the proceeds may be used but also affects the coupon rate which is a key consideration for both issuers and investors.
How Do Bonds Differ?
Bonds are transferable debt securities issued by companies (issuers) and traded on stock exchanges. In the bond offering document (prospectus), issuers specify, among other things, the intended use of proceeds (for example, for general corporate purposes, a specific M&A transaction, or the construction of a new facility, etc.).
Conventional bonds, which are not specially marked or highlighted on stock exchange listings, differ from green or defense bonds primarily in terms of the use of proceeds. To qualify as green or defense bonds, the funds raised must be allocated to environmentally sustainable or defense-related projects, respectively.
To structure a bond offering in accordance with a specific type of bond, companies must clearly define the intended use of the proceeds raised from the issuance. This allows issuers to demonstrate that they are financing well-defined projects while also giving investors confidence that their investment goals align with the issuer’s objectives.
Bond Standards, Issuance, and Investment Opportunities
Bond issuances are carried out in accordance with an offering document or prospectus, which outlines key information about the issuer and sets the bond parameters by balancing the issuer’s own requirements and necessities with investor expectations. These parameters typically include maturity, coupon rate, early redemption conditions, financial covenants, and other commitments.
To ensure clarity and consistency when issuers label projects as “green,” “sustainable,” “security-enhancing,” or otherwise, clear frameworks have been established at both the European and Nasdaq levels. The main standards include the European Green Bond Standard (EuGB), introduced through the EuGB Regulation; the International Capital Market Association’s (ICMA) Green Bond Principles; and Nasdaq Defense, Resilience, and Infrastructure Bond Criteria, which allow defense-sector companies to raise capital on Nasdaq’s European bond markets.
In the first half of 2025, SIA “Rīgas ūdens” became the first Latvian municipal company to raise funds capital in the capital market, as well as the first Northern European issuer of bonds compliant with the European Green Bond Standard. Previously, Latvian companies such as AS “Latvenergo” and AS “Attīstības finanšu institūcija Altum” had issued green bonds aligned with ICMA’s Green Bond Principles. In fall 2025, Lithuania’s state-owned Valstybės Investicinis Kapitalas became the first issuer to list bonds under Nasdaq Defense, Resilience, and Infrastructure Bond Criteria.
Although bond issuance itself complies with regulatory requirements, the application of specific bond standards provides an additional layer of transparency. This enables companies to attract financing for targeted projects, such as sustainability or defense, while giving investors a clear view of how their capital is being used.
In summary, companies issuing bonds on the capital markets can choose between conventional, green, or defense bond structures, each defined by how the raised funds are used. The most appropriate bond type depends on the purpose of the financing and the nature of the projects being funded.
In choosing, issuers should assess the intended use of proceeds, investor base, regulatory requirements, and reputational considerations, selecting the structure that aligns both with project goals and with investors’ expectations. On the other hand, investors should assess how the issuer’s objectives and the offering structure align with their overall investment strategy.
Bonds are transferable debt securities issued by companies (issuers) and traded on stock exchanges. In the bond offering document (prospectus), issuers specify, among other things, the intended use of proceeds (for example, for general corporate purposes, a specific M&A transaction, or the construction of a new facility, etc.).
Conventional bonds, which are not specially marked or highlighted on stock exchange listings, differ from green or defense bonds primarily in terms of the use of proceeds. To qualify as green or defense bonds, the funds raised must be allocated to environmentally sustainable or defense-related projects, respectively.
To structure a bond offering in accordance with a specific type of bond, companies must clearly define the intended use of the proceeds raised from the issuance. This allows issuers to demonstrate that they are financing well-defined projects while also giving investors confidence that their investment goals align with the issuer’s objectives.
Bond Standards, Issuance, and Investment Opportunities
Bond issuances are carried out in accordance with an offering document or prospectus, which outlines key information about the issuer and sets the bond parameters by balancing the issuer’s own requirements and necessities with investor expectations. These parameters typically include maturity, coupon rate, early redemption conditions, financial covenants, and other commitments.
To ensure clarity and consistency when issuers label projects as “green,” “sustainable,” “security-enhancing,” or otherwise, clear frameworks have been established at both the European and Nasdaq levels. The main standards include the European Green Bond Standard (EuGB), introduced through the EuGB Regulation; the International Capital Market Association’s (ICMA) Green Bond Principles; and Nasdaq Defense, Resilience, and Infrastructure Bond Criteria, which allow defense-sector companies to raise capital on Nasdaq’s European bond markets.
In the first half of 2025, SIA “Rīgas ūdens” became the first Latvian municipal company to raise funds capital in the capital market, as well as the first Northern European issuer of bonds compliant with the European Green Bond Standard. Previously, Latvian companies such as AS “Latvenergo” and AS “Attīstības finanšu institūcija Altum” had issued green bonds aligned with ICMA’s Green Bond Principles. In fall 2025, Lithuania’s state-owned Valstybės Investicinis Kapitalas became the first issuer to list bonds under Nasdaq Defense, Resilience, and Infrastructure Bond Criteria.
Although bond issuance itself complies with regulatory requirements, the application of specific bond standards provides an additional layer of transparency. This enables companies to attract financing for targeted projects, such as sustainability or defense, while giving investors a clear view of how their capital is being used.
In summary, companies issuing bonds on the capital markets can choose between conventional, green, or defense bond structures, each defined by how the raised funds are used. The most appropriate bond type depends on the purpose of the financing and the nature of the projects being funded.
- Conventional bonds are best suited for general corporate needs or projects without a specific sustainability or defense focus.
- Green bonds are appropriate when proceeds are allocated to environmentally sustainable projects and when the issuer wants to demonstrate ESG commitment.
- Defense bonds fit companies financing security, resilience, or defense-related initiatives.
In choosing, issuers should assess the intended use of proceeds, investor base, regulatory requirements, and reputational considerations, selecting the structure that aligns both with project goals and with investors’ expectations. On the other hand, investors should assess how the issuer’s objectives and the offering structure align with their overall investment strategy.
