The National Treasury Management Agency has today raised €3 billion from the sale of its first 12-year "green bond".
This was the first time the NTMA has tapped an increasing popular market that raises capital for projects with environmental benefits.
The funds were raised at a yield of 1.399%.
The NTMA said there was strong demand for today’s transaction. The total order book of over €11 billion included in excess of 170 individual accounts, a substantial number of which were new accounts.
NTMA Director of Funding and Debt Management, Frank O’Connor said, "Today demonstrates our commitment to finding attractive new ways to meet the State’s funding requirement by diversifying our issuance and accessing a new base of investors to lend to Ireland. Sovereign Green Bonds are an innovative form of finance and it makes sense for Ireland to be at the forefront of developments in this space."
He said the transaction brings the agency's year to date funding to over €16.5 billion compared to the NTMA’s stated target of €14 - €18 billion. "It leaves the State well placed before our last bond auction of 2018 in November," Mr O'Connor said.
Ireland joins a small number of EU countries including France, Belgium and Poland in entering the growing market that earmarks proceeds for environmentally friendly projects or initiatives that blunt the impact of climate change.
Although green bonds make up a small fraction of the overall bond market, global interest has soared as banks, sovereigns and companies look to tap appetite for such investments.
Yesterday Finance Minister Paschal Donohoe set the budget for 2019, which aims to balance the state's books for the first time in more than a decade and showed the national debt would continue to fall as a percentage of national income.
"The timing and the fiscal backdrop could hardly be better for the Irish DMO (debt management office).
"Yesterday's budget highlighted the current strength of Ireland's economic/fiscal position," said Ryan McGrath, head of fixed income strategy and sales at Cantor Fitzgerald.
The reference to the green bond in Finance Minister Paschal Donohoe's budget speech was also important, McGrath said, as cross government departmental support is needed for successful green bond issuance.
Government representatives joined the NTMA in roadshows held around Europe to brief investors, a source told Reuters last week.
The sale also allows the debt agency to meet a long-stated aim of diversifying away from standard bonds and saw it pass its minimum funding needs for the year, having previously raised €13.5 billion of a €14-18 billion target.
Barclays, BNP Paribas, Citi, Danske Bank, HSBC and JP Morgan were joint lead managers for the deal.
