EU raises EUR 12 billion in world’s largest green bond issuance

The European Commission issued the first green bond to finance sustainable investments for economic recovery and resilience. The sale of EUR 12 billion in debt securities, the biggest so far on a global scale, attracted record demand as well.

The European Union intends to finance 30% of its EUR 800 billion NextGenerationEU investment package by end-2026 with green bonds. In the first issuance, it sold EUR 12 billion in such debt securities, exclusively for green and sustainable investments. The placement was the biggest ever in the class in the world’s capital markets.

Furthermore, the 15-year bond due in February 2037 was more than 11 times oversubscribed, with books exceeding EUR 135 billion, which is another record. The European Commission said it achieved excellent pricing conditions. The bond carries a coupon of 0.4% and the re-offer yield came in at 0.453%.

The bond carries a coupon of 0.4% and the re-offer yield came in at 0.453%

Fund managers account for the largest share of buyers, 39%. In geographic terms, investors from the United Kingdom snatched 29%, compared to 12% for Nordic countries and 11% each for the Benelux region and France.

The EU is set to become the world’s largest green bond issuer by far, providing a significant boost to sustainable finance markets as well as funding a greener EU recovery from the pandemic, the European Commission said. It added the program would allow a wide range of investors access to green investments and strengthen the role of the EU and the euro in the sustainable finance markets.

The NextGenerationEU bond issuance program will allow a wide range of investors access to green investments, the European Commission says

The framework for the green bonds is based on principles developed by the International Capital Markets Association (ICMA). The European Parliament and the Council of the EU should adopt the proposed EU Green Bond standard at a later stage.

Nine tenths of the NextGenerationEU funds are intended for the Recovery and Resilience Facility, which covers member states’ recovery and resilience plans. Every country must dedicate 37% to green and sustainable investments such as renewables and emission cuts.

The EU already raised EUR 68.5 billion with ordinary bonds and EUR 14 billion by selling EU-Bills.