EU issues EUR-12bn green bond to land on greener pastures after pandemic

European Commission. Author: Sébastien Bertrand. License: Creative Commons, Attribution 2.0 Generic.

October 13 (Renewables Now) - The European Commission (EC) on Tuesday issued its first green bond, worth EUR 12 billion (USD 13.9bn), to fund the green and sustainable elements of its NextGenerationEU recovery plan from the COVID-19 pandemic.

Investor appetite in the 15-year bond due in February 2037 was overwhelming, with the EC saying that the issue was more than 11 times oversubscribed.

“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,” said Johannes Hahn, Commissioner in charge of Budget and Administration.

The EC plans to issue up to EUR 250 billion of green bonds by the end of 2026, which will make the EU the world’s largest green bond issuer, the Commission said.

The NextGenerationEU post-coronavirus recovery package stands at just over EUR 806 billion in current prices. Most of the money, or EUR 723.8 billion in total, will finance the Recovery and Resilience Facility (RRF), a set of loans and grants available to every member state.

Under the RRF rules, member states have to reserve at least 37% of their recovery and resilience plans for measures and projects that support the green transition and climate objectives, such as promoting renewable energy, energy efficiency and biodiversity preservation.

The green bond is the bloc’s fifth issuance since the Commission started raising NextGenerationEU funds in June 2021. By the end of the year, the EC expects to have raised some EUR 80 billion in bonds, complemented by short-term EU-Bills, the EU executive said.

(EUR 1.0 = USD 1.156)

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