The EU launched its very first green bond on Tuesday in record demand, according to a senior manager, taking its first step to potentially becoming the largest issuer of environmentally friendly debt with a record-sized deal.
The 15-year green bond, which will raise € 12 billion ($ 13.9 billion), has received more than € 135 billion in demand, a senior manager told Reuters, making it the most big green bond launch and highest level of demand for a green bond. sale to date.
The bond, which will fund member states’ environmentally beneficial projects under the bloc’s COVID-19 stimulus fund, is the first step for the EU – which aims to be carbon neutral by 2050 – to become a leading force in the rapidly growing green debt market.
Green bonds will fund 30% of the EU’s COVID-19 stimulus package up to € 800 billion, which provides grants and loans to member states until the end of 2026.
Up to € 250 billion in issues could make the EU the world’s largest green bond issuer.
This is the scale of issuance that BofA Securities analysts expect the EU to issue € 35-45 billion of green bonds each year, equivalent to what all sovereign and supranational borrowers Europeans issued in 2020.
Bram Bos, senior portfolio manager for green bonds at NN Investment Partners, said the scale of EU issuance would significantly increase the liquidity of the green bond market.
“I think the possibility and the obstacles to start ‘greening’ your government portfolios are getting easier and easier with this kind of EU issuance, which in terms of size is huge,” Bos added.