UPDATE 1-EU hires banks for debut green bond sale -lead managers

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October 11 (Businesshala) – The European Union hired banks on Monday to sell its first green bonds, memos from two key managers seen by Businesshala as its first step towards becoming a major force in the eco-friendly debt market raised.

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The 15-year green bond will raise 12 billion euros ($13.87 billion) due in February 2037, the memo said, making it the largest green bond launch ever in the government bond market.

This would exceed the record 10 billion pounds ($13.63 billion) Britain raised from a green bond sale in September.

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The bonds, which will finance member states’ green projects as part of the bloc’s Coronavirus Recovery Fund, will be launched “subject to market conditions in the near future,” a phrase the Debt Management Office typically uses a day before the sale. Do it, said Memo.

The deal is a first step for the European Union, which aims to be carbon-neutral by 2050, on its way towards becoming a dominant force in the rapidly growing green bond market.

The green bond will fund 30% of the EU’s coronavirus recovery fund of up to 800 billion euros, which gives member states grants and loans through the end of 2026.

The issue of up to 250 billion euros could turn the EU into the world’s largest green bond issuer.

Investors will watch pricing closely, and analysts expect EU green bonds, like their peers, to be priced at a slightly lower yield than comparable traditional bonds – which investors consider to be “on environmental debt driven by a dedicated investor base”. referred to as “Greenium”. Limited stock of green assets.

The memo states that the EU has hired BofA Securities, Credit Agricole, Deutsche Bank, Nomura and TD Securities to lead the sale.

Reporting by Yoruk Bahceli; Editing by Dhara Ransingham and Steve Orlofsky

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