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Italy raises 10 billion euros from new green bond
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Demand doubles from bond sales earlier in 2023
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Cyprus raises 1 bln euros from debut sustainable bond
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Record demand for Cyprus bond
(Adds Cyprus details)
By Yoruk Bahceli and Antonella Cinelli
ROME/AMSTERDAM April 4 (Reuters) - Italy raised 10
billion euros ($11 billion) from a new green bond and Cyprus
launched its first sustainable bond on Tuesday as governments
took advantage of high demand for such assets following weeks of
wild swings in bond markets.
Italy received over 52.9 billion euros of demand for the
eight-year green bond, which funds environmentally beneficial
projects, a lead manager said, double Italy's mainstream bond
sales in January and February.
James Farrelly, sovereign, supranational and agency syndicate at Credit Agricole, a lead manager, said the green format allowed Italy to sell a bigger deal.
"The big difference here was on the quality of volume that we could have offered to the Treasury," Farrelly said, estimating that all else being equal, Italy would have raised a smaller size through a conventional bond. UniCredit analysts had expected Italy's bond sale to raise up to seven billion euros. Green bonds and other environmental, social and governance (ESG) focused assets help borrowers tap an additional pool of sustainability investors focused exclusively on such assets, which can help boost demand in volatile markets and provide a pricing advantage. Italy's bond, which marks its third green bond and matures on 30 October 2031, was priced to yield 4.056%. Elsewhere, Cyprus raised 1 billion euros from its first sustainable bond, the country's debt office said, becoming the latest European government to enter the market. The deal received more than 12 billion euros of demand, a record for Cyprus, Stelios Leonidou, who manages Cyprus's debt issuance, told Reuters.
"This is the biggest (investor order) book we've had ever, in a year when market conditions for issuing sovereign bonds have not been as good as last year," he said.
Sustainable bonds are a broader form ESG debt, proceeds from which can be spent on both green and social projects. Cyprus follows a number of smaller countries including Slovenia and Luxembourg opting for sustainable bonds as they often struggle to find enough projects to back standalone green bonds. The 10-year bond, which matures on 13 April 2033, was priced at a yield of 4.219%. Leonidou said Cyprus expects to sell sustainable bonds every two or three years going forward.
The deals follow a green bond sale by the European Union last week that also saw strong demand. It was not just governments that were keen to tap the ESG debt market. BNP Paribas on Tuesday raised 1 billion euros from a green, loss-absorbing bond, according to a lead manager.
It marked the first subordinated issuance since Credit
Suisse's wipeout of its AT1 bondholders, another type of
loss-absorbing debt, roiled investors in March.
($1 = 0.9142 euros)
(Reporting by Yoruk Bahceli, Antonella Cinelli and Valentina
Consiglio; editing by Federico Maccioni, Christina Fincher and
Josie Kao)
