France extends green bond lead with $8 billion sale of new debt

Bloomberg

France amassed its biggest-ever green bond orderbook in its second sale of new debt, extending a pole position in the market to finance environmental projects.
The nation raised 7 billion euros ($8.3 billion) from the securities maturing in 2044. Investors bid over 34.5 billion euros, about 50% more than for its first such offering in 2017, reflecting the surge in appetite for assets aimed at mitigating climate change. That still lagged the records set in Italy’s recent debut deal.
The sale keeps France setting the pace for volume in one of the fastest-growing sectors in global finance. Yet it’s now facing competition for green investors from a host of newer entrants, including Germany, and is likely to be overtaken by the EU after the bloc starts selling debt to finance its recovery from the pandemic.
“There’s increased demand for green bonds driven by investor demand, the regulatory push and sharpening of green support from the European Central Bank going forward,” said Sylvain de Bus, deputy head of global bonds at Candriam
Belgium.
France priced the notes at 18 basis points above the government’s existing debt, inside an initial target of about 20 basis points, according to a person who wasn’t authorised to speak publicly and asked not to be identified. The Paris-based debt agency said record-low interest rates have left investors clamouring for longer-dated assets.
Proceeds from new sale will go towards financing 15 billion euros of eligible green projects, Anthony Requin, head of France’s debt agency, said. The nation has previously tapped its 2039 note multiple times to borrow an unprecedented 28.9 billion euros, according to data compiled by Bloomberg.
For a single sale, France’s effort was topped by Italy’s first green bond earlier this month, which drew over 80 billion euros of bids and raised 8.5 billion euros, both records. France’s offering was managed by BNP Paribas SA, Citigroup Inc., Credit Agricole SA, HSBC Holdings Plc and JPMorgan Chase & Co.
The French offering lifted the marketwide issuance in Europe’s primary market to 17.8 billion euros.
Junk bonds are about $9 billion away from making this the second busiest March on record for issuance, according to data compiled by Bloomberg. With more than $27 billion already sold this month, that could happen as soon as this week with more companies expected to hit the market to lock in low borrowing costs.