Germany raises $7.7bn from debut green bond

Bloomberg

Germany racked up near-record demand for a bond sale in its debut green debt offering, grabbing nearly a tenth of the growing global market.
It raised $7.7 billion from the 10-year sale, with demand more than five times that at 33 billion euros. The strong investor interest meant it priced one basis point tighter to the existing conventional bond.
“There’s a big demand, and the fact that Germany’s done it today will probably spur also some other European member states to look into this market,” said Tanguy Claquin, head of sustainable finance at Credit Agricole SA, one of the bookrunners on the sale.
The offers nearly matched a record set at a sale of conventional bonds earlier this year. Another green maturity is due to be sold in the fourth quarter, taking issuance this year to around 11 billion euros, Joerg Kukies, Germany’s Deputy Finance Minister, said last week.
Germany aims to be the benchmark issuer for green debt in Europe, according to Kukies, taking up a mantel that it has long held with its normal bonds thanks to its AAA rating.
The green debt has a coupon of 0%, with a yield equating to -0.46%, just below similar-maturity conventional bonds.

While the nation has lagged others in issuing debt to be used for environmental projects, its entry is significant for the size of issuance, and plans to twin the bonds with conventional securities in an effort to build a more liquid market. Spain, Italy and Austria could be among those to follow.

Conventional German bond yields have tumbled into negative territory
Germany aims to be the benchmark issuer for green debt in Europe, according to Kukies, taking up a mantel that it has long held with its normal bonds thanks to its AAA rating. The green debt has a coupon of 0%, with a yield equating to -0.46%, just below similar-maturity conventional bonds.

“Compared with a traditional bond from Germany, there is a very diversified demand for this bund coming from a number of green players, and a lot of quality orders,” said Claquin. “It doesn’t look like a usual bund book, it’s clearly greener.”