13 October 2021 / Macro

EU’s NextGen bonds 11 times oversubscribed in first issuance

By ESG Clarity

The 15-year bond will exclusively back green projects

EU’s NextGen bonds 11 times oversubscribed in first issuance

The European Commission has raised €12bn in the first issuance of the NextGenerationEU green bond, setting up the EU to become the world’s largest green bond issuer.

The 15-year bond was released on 12 October and was more than 11 times oversubscribed, with books exceeding €13bn. A wide range of investors expressed interest in the bond, which will mature on 4 February 2037.

Part of the government’s Covid recovery plans, the NextGenerationEU green bonds will exclusively fund sustainable projects across the continent to endorse a greener comeback from the pandemic. The EU said the strong oversubscription rate is a “promising start” to the NextGenerationEU green bond programme of up to €250bn by end of 2026.

Commissioner in charge of budget and administration, Johannes Hahn, said: “Set to turn the EU into the world’s biggest green bond issuer, [the issuance] is a powerful signal of the EU’s commitment to sustainability. Our future is green and it is extremely important that we seize the opportunity to clearly show to investors that their funds will be used to finance a sustainable European recovery.”

The EU has adopted the Green Bond Principles of the International Capital Market Association (ICMA) as a framework for the new bonds to reassure investors capital will be directed to green investments and subject to independent reviews.

Eligible investments from the already approved plans include a research platform for energy transition in Belgium, or the construction of wind power plants on land in Lithuania.

Part of the Bonhill Group.