By Emese Bartha
The European Union raised 12 billion euros ($13.87 billion) in its debut green bond under the NextGenerationEU program on Tuesday, with the more-than 10-fold demand underpinning investors' strong appetite for green assets.
Demand for the new February 2037-dated green bond, the largest green bond issue to date, closed in excess of EUR135 billion, said one of the lead manager banks. The spread on the bond was set eight basis points below mid-swaps, said the same bank. The bond has a 0.40% coupon and it was priced at 99.219, at a reoffer yield of 0.453%.
The issue puts the EU on track to become the largest green bond issuer in the coming years. The EU plans to secure 30% of total NGEU-issuance in green format, accounting for up to EUR250 billion until the end of 2026.
"Expectations are running high that the EU will solve the inherent supply-demand imbalance in green bonds," Commerzbank's rates strategists Rainer Guntermann and Michael Leister said.
The proceeds from the issue will be used for nine broad categories of expenditures, including energy efficiency, clean energy and climate-change adaptation, in line with the NGEU's green bond framework.
The banks that acted as joint lead managers were BofA Securities, Credit Agricole CIB, Deutsche Bank, Nomura and TD Securities.
Write to Emese Bartha at emese.bartha@wsj.com
(END) Dow Jones Newswires
10-12-21 0919ET
