Austria announced the completion of its inaugural green bond issuance, raising €4 billion to finance sustainable investments. The offering of the 27-year bond was met with very strong demand, at nearly 7x oversubscribed, earning the bond a 2.5 bp “greenium,” or a favorable yield spread relative to similar issues lacking green credentials.
According to the Austrian Treasury, the order book for the offering reached over €25 billion. In a statement following the issuance, the Treasury said, “this represents a remarkable order book size, showing the strong reception of Austria’s first Green Bond issuance.”
The offering follows the recent publication of the Austrian Treasury’s Green Bond Framework, outlining the eligible categories of investment from proceeds from green bond issuances. Proceeds from the offering are expected to be allocated to investments supporting Austria’s “green transition,” including clean transportation, renewable energy, sustainable water and wastewater management, increasing biodiversity and preventing pollution.
The framework received a second party opinion (SPO) from ISS Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments., confirming that it is in consistent with the company’s sustainability strategy. The SPO also found that the framework is aligned with EU Taxonomy requirements, making it one of the first to do so by a sovereign issuer.
More than 200 investors participated in the transaction, with 65% of the allocation going to Eurozone investors, and 20% to the UK. Investor allocation by type included fund managers at 47%, banks (21%), and insurance and pension funds (18%). “Green” investors accounted for 70% of the total allocation.
Markus Stix, Managing Director of the Austrian Treasury, said:
“We have reached an important milestone today, which enables investors to diversify their portfolios towards sustainable assets. Our high reputation in the market as an issuer with a powerful Green agenda, proven by a robust Green Framework, was very well perceived by the market and led to strong demand. As a result, we were able to expand our already broad investor base”.
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