EU issues its first green bonds; raises $ 13.8 billion

The European Commission issued its first green bonds on Tuesday, raising 12 billion euros ($ 13.8 billion) in an auction that drew strong demand from investors.

The EU executive branch plans to issue up to € 250 billion in these securities by the end of 2026 as part of its plans to fund the 27-nation bloc’s recovery from the coronavirus pandemic.

The European Commission said the 15-year bond was oversubscribed more than 11 times, with a portfolio exceeding 135 billion euros.

“This marks the largest order book for green bonds in global capital markets, and the largest green bond ever issued, not in Europe, but in the world,” said Johannes Hahn, European Commissioner for Budget and Administration.

To finance the recovery stimulus, the EU executive arm said it will raise up to an estimated € 800 billion from capital markets by the end of 2026, of which 30% will be raised through green bonds. In total, the 27 nations of the bloc agreed on a budget of 1.8 trillion euros and a recovery package against pandemics.

The EU has the ambition to become a leader in the market for green bonds, which are reserved for sustainable investments.

“It will enable investors to diversify their green investment portfolio with a highly rated liquid asset, thereby potentially accelerating a virtuous cycle of sustainable investments,” Hahn said.

As part of its ambitious “Green Deal”, the EU has committed to reducing emissions of the gases that cause global warming by 55% during this decade and has set itself a goal of being carbon neutral by 2050.

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To receive their share of recovery aid, EU countries have accepted that their national plans must dedicate at least 37% of budgets to climate-related projects.

“Our future is green and it is extremely important that we take the opportunity to clearly show investors that their funds will be used to finance a sustainable European recovery,” Hahn said.

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