Business Express is an online portal that covers the latest developments in the world of business and finance. From startups and entrepreneurship to mergers and acquisitions, Business Express provides reporting on the stories that matter most to business leaders and decision-makers.The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.
2021 09 21T125850Z 4 LYNXMPEH8K0B3 RTROPTP 4 BRITAIN STERLING
2021 09 21T125850Z 4 LYNXMPEH8K0B3 RTROPTP 4 BRITAIN STERLING

UK’s first green gilt draws record $137 billion demand


By David Milliken and Yoruk Bahceli

LONDON (Reuters) – Britain sold 10 billion pounds of its first ‘green’ government bond on Tuesday after attracting over 100 billion pounds ($137 billion) of demand from investors, a record high which shows the clamour for assets which can be marketed as good for the planet.

Proceeds from the sale will be ring-fenced for projects such as clean energy and transport, and will also help Britain’s government burnish its green credentials before it hosts the United Nations COP26 climate conference in Glasgow in November.

Britain has lagged behind other European countries such as Germany, Italy and Spain in issuing this type of debt, partly because of concern that investors would want higher interest rates to compensate for a relative lack of liquidity.

But Tuesday’s launch of the new gilt maturing in July 2033 represents the largest single sale by a sovereign issuer, topping the previous 8.5 billion euro record set by Italy in March.

“It’s confirmation that the demand is there even in sterling, not just in euros,” said Antoine Bouvet, senior rates strategist at ING.

Based on the secondary market, he estimated the deal was pricing in a roughly 3 basis point “greenium” — the slightly lower yield green bonds offer versus conventional debt, reflecting a dedicated investor base chasing a limited supply of these assets.

Britain has said it aims to raise around 15 billion pounds in total from two green gilt launches this year – Tuesday’s sale and a new 20- to 30-year maturity green gilt next month.

This issuance will be only a small fraction of the total 253 billion pounds of gilt sales planned for this financial year.

Don't miss out on any breaking news or insightful opinions!
Subscribe to our free newsletter and stay updated on the go!


By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email.

The new 2033 gilt will pay a coupon of 0.875% and has been priced to give a yield of 0.8721%, 7.5 basis points more than the conventional June 2032 gilt, a yield premium which reflects the longer maturity rather than a lack of liquidity for the new issue.

Matthew Amis, an investment director at Aberdeen Standard Investments, said the gilt had been priced more cheaply than some other green issues and offered fair value compared with conventional gilts.

“The lack of a significant ‘greenium’ has certainly added to the huge demand,” he said. “We expect this gilt to perform well in the coming days and months.”

The Bank of England has said it will buy green bonds as part of its asset purchase programme and treat them like similar conventional ones.

($1 = 0.7305 pounds)

 

(Editing by Andy Bruce, Giles Elgood and Emelia Sithole-Matarise)

 

Recent Post: