Filenews 13 October 2021
The European Commission today issued its first Green Counterpart NextGenerationEU bond and raised €12 billion euros that will be used exclusively for green and sustainable investments across the EU. Globally, this is the largest green bond issue in history.
With The Next GenerationEU Green Bonds, the EU is expected to take the position of by far the world's largest issuer of green bonds, providing a significant boost to sustainable financial markets and financing the EU's greenest recovery from the pandemic. Thanks to the high oversubscription rate and excellent pricing conditions, today's issuance is a promising start to the Next GenerationEU Green Bond Programme, which will reach up to €250 billion by the end of 2026.
The 15-year bond maturing on February 4, 2037 was oversubscribed more than 11 times, while the offer books exceeded €135 billion. The bond attracted the interest of a wide range of investors.
The world's largest issuer of green bonds
Commissioner for Budget and Administration Johannes Hahn said: "Today's issuance is a strong start for the Next Generation EU Green Bond Programme. It is expected to make the EU the world's largest issuer of green bonds and is a strong signal of the EU's commitment to sustainability. Our future is green and it is extremely important that we seize the opportunity to make it clear to investors that their funds will be used to finance a sustainable European recovery. »
Today's release follows the adoption of the Framework for NextGenerationEU Green Bonds earlier in September. The framework, which fully complies with the Principles of Green Bonds of the International Capital Markets Union (ICMA), which is a market model for green bonds, assures investors that the funds mobilised will be used for green investments. The Commission's reports on the use of revenues and the environmental impact of costs financed by NextGenerationEU green bonds will be independently audited.
Recovery and resilience plans
The funds from the NextGenerationEU Green Bond Issuances will be used to finance green and sustainable expenditure under the Recovery and Resilience Facility. Eligible investments from the projects already approved include a research platform for the energy transition in Belgium or the construction of wind power plants on land in Lithuania.
At least 37% of each recovery and resilience plan must be dedicated to the green transition, with many Member States trying to exceed this figure.
This is the fifth syndicated transaction since the launch of NextGenerationEU financing operations in June 2021. In addition, the Commission conducted the first Next Generation EU bond auction at the end of September. These operations have so far enabled the Commission to raise long-term funding of €68.5 billion through bonds.
In addition, to date the Commission has issued around €14 billion of EU promissory notes after the launch of EU bill auctions in mid-September 2021.
In the course of 2021, the Commission expects to raise around €80 billion in bonds, which will be complemented by short-term EU bills, as announced in the financing plan published in June 2021 and updated in September 2021.
As announced in September in the detailed issuance programme for 2021, the Commission plans to carry out another syndicated transaction by the end of the year, in November. The Commission will also conduct auctions of EU bills and bonds on a regular basis.
