Dutch issue first 'green bond'

Wednesday, May 22, 2019

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THE HAGUE, Netherlands (AFP) — The Dutch g overnment issued a “green bond” on Tuesday, raising nearly 6 billion euros as it became the first top-rated country to tap the growing market for environmentally friendly investments.

The Netherlands is the sixth country to issue environmentally friendly sovereign debt, after fellow EU nations Poland, France, Belgium, Ireland and Lithuania.

“The Netherlands is today the first triple A country to issue a green bond,” Dutch Finance Minister Wopke Hoekstra said on Twitter, referring to its international bond rating.

The Dutch sale raised 5.9 billion euros (US$6.6 billion) for bonds of 21 years, Frederic Gabizon, a bond trader at HSBC, which was one of the banks involved in the operation, told AFP.

Total demand was 21.2 billion euros, he said.

“I'm very proud that we could launch a product today that was so much in demand... I'm very happy that that was something the market was clearly waiting for,” Elvira Eurlings ofDutch State Treasury Agency told AFP.

Eurlings said it would “really boost the green capital market”.

“We felt that was the perfect moment to issue a green bond now. We hope also to inspire other companies, governments to consider issuing green bonds — looking at the work that we have been doing,” she added.

Climate change and the environment are pressing issues for the Netherlands, where at least a third of the country lies below sea level.

Analysts said the Netherlands' first green bond set a high bar for other countries because of its tough environmental standards.

“We are looking at this green bond with a very favourable eye, particularly because it is the first sovereign green bond with such strict conditions,” said Bram Bos, a portfolio manager at NN Investment Partners.

Hoekstra said earlier this year that these “dark green bonds” would only finance projects that meet specific criteria such as such as making a “substantial contribution to reducing CO2 emissions”.

Green bonds —where governments sell debt specifically earmarked for environmental projects — launched a decade ago, but the overall share of green instruments in global finance remains small.

They account for only US$156.8 billion or two percent of the global bond market, according to HSBC.

Poland was the first country to enter the green bond market with a more modest 750-million-euro issue in December 2016.


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