London and Brussels, Tuesday, 12 October 2021
Investors showed strong demand for green bonds on Tuesday as the European Commission issued them for the first time, raising 12 billion Euros (approx. £10.2 billion).
This first issue comes as part of the EU’s plan to further issue up to 250 billion Euros in green bonds by the end of 2026, in order to finance the recovery of the 27 EU member-states, from Covid-19.
The European Commission noted that the 15-year bond was oversubscribed more than 11 times, with books exceeding 135 billion Euros.
Johannes Hahn, the commissioner in charge of budget and administration, said “this marks the largest green bond order book ever in global capital markets, and the largest green bond ever issued, not in Europe, but in the world.”
The recovery stimulus will be financed from capital markets up to an estimated 800 billion Euros, EU says. This is expected by the end of 2026 with a 30% to be raised via green bonds, while in total, the EU has agreed on a 1.8 trillion Euro budget and pandemic recovery package.
By the looks of it, it seems that the EU wishes to play a leading role in sustainable investments and the green bonds will certainly be the vehicle to serve that scope.
European Commissioner for Budget and Administration, Johannes Hahn said: “It will allow investors to diversify their portfolio of green investments with a highly rated liquid asset, thereby potentially accelerating a virtuous circle of sustainable investments”.
As the 27-nation bloc is moving towards a “green reality” via its “Green Deal”, the EU is targeting to cut gas emissions that cause global warming by 55% over this decade, while its target is to be carbon-neutral by 2050.
The recovery aid to the EU countries comes under the condition that at least 37% of the budgets will be allocated to climate-related projects. This was duly accepted.
“Our future is green and it is extremely important that we seize the opportunity to clearly show to investors that their funds will be used to finance a sustainable European recovery,” Hahn said.
(Written and edited by: The Decision Maker)