October 10, 2019 / 1:19 PM / 6 days ago

Ireland sells 2 billion euros of green bonds at low yield

DUBLIN (Reuters) - Ireland raised 2 billion euros ($2.2 billion) on Thursday from the sale of green bonds at a yield well below a debut sale a year ago, highlighting the growing popularity of the bonds which provide cash for projects with environmental benefits.

Dublin mandated a syndicate of banks to tap its solitary green bond that matures in 2031 and, after selling more than the 1 to 1.5 billion euros targeted, canceled its final bond auction of 2019 having raised sufficient funds for the year.

A year ago Ireland sold 3 billion euros of the then debut 12-year green bond at a yield of 1.4% but with interest rates tumbling further in the last 12 months, the National Treasury Management Agency (NTMA) only had to offer a yield of 0.229% on Thursday.

“Today builds on the success of our inaugural sovereign green bond. It allows us to add liquidity to the bond and to continue our program of diversification that has seen us widen our investor base and increase the range of debt we offer,” NTMA Director of Funding Frank O’Connor said in a statement.

Ireland received over 11 billion euros worth of orders, a similar level of demand from a year ago, with asset managers snapping up 43% of the debt, banks a further 24% and the remainder divided out between hedge funds, central banks and the pension and insurance sector, all distributed throughout Europe.

Having raised 15.4 billion euros in cash from bond sales and placements out of a 14 to 18 billion euro target for 2019, the NTMA canceled its one remaining regular bond auction scheduled for Nov. 14.

Although green bonds make up a fraction of the overall market, global interest has soared as banks, sovereigns and companies look to tap into increasing investor appetite as calls grow for tougher and swifter steps against climate change.

Led by issuance in France and the Netherlands, a total of 8 billion euros in sovereign green bonds were issued in the second quarter, the greatest quarterly change to date, the Association for Financial Markets in Europe said last month.

BNP Paribas (BNPP.PA), Barclays (BARC.L) Bank of America Merrill Lynch (BAC.N), Danske Bank (DANSKE.CO), J.P. Morgan (JPM.N) and Davy Stockbrokers were joint lead managers on the deal.

Reporting by Padraic Halpin; Editing by Gareth Jones, Jane Merriman and Pravin Char

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