EU to be world’s largest green bond issuer with €250bn

The European Commission announced it would start to sell up to €250 billion in green bonds this October as part of its plans to finance the 27-nation bloc’s recovery from the coronavirus crisis.

“The European Commission has today adopted an independently evaluated Green Bond framework, thus taking a step forward towards the issuance of up to €250 billion green bonds, or 30% of NextGenerationEU’s total issuance,” said the Commission.

“The framework provides investors in these bonds with confidence that the funds mobilised will be allocated to green projects and that the Commission will report on its environmental impact.

“Now that the framework has been adopted, the Commission will soon proceed with the first green bond issuance in the month of October, subject to market conditions.”

NextGenerationEU is a temporary recovery instrument of €800 billion in current prices to support Europe’s recovery from the coronavirus pandemic.

To finance NextGenerationEU, the European Commission – on behalf of the EU – will raise up to around €800 billion from the capital markets between now and end-2026.

In September 2020, the European Commission announced its intention to raise 30% of the NextGenerationEU funds through the issuance of green bonds and use the proceeds to finance green investments and reforms.

Commissioner in charge of Budget and Administration, Johannes Hahn, said: ”The EU’s intention to issue up to €250 billion in green bonds between now and end-2026 will make us the largest green bond issuer in the world.

“This is also an expression of our commitment to sustainability and places sustainable finance at the forefront of the EU’s recovery effort”.

As announced earlier this year, the Commission has also reviewed its plan for funding the recovery in 2021 and confirmed its intention to issue a total of around €80 billion of long-term bonds this year, to be topped up by tens of billions of euros of short-term EU-Bills.

The Commission will be offering the EU-Bills exclusively via auctions, with its auctioning programme due to start on September 15.

The Commission will be organising typically two auctions per month for EU-Bills, on the first and third Wednesday of the month.

The auctioning programme will also be used for bonds, in addition to syndications. The Commission in general will be holding one auction and one syndication per month for its bonds.

Hahn added: “The confirmation of our original funding plan for 2021 is a sign of the excellent planning and preparatory work done so far.

“The launch of our auctioning platform is another piece of great news, which will further raise the attractiveness of EU borrowing and have a lasting impact on the EU capital markets.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.