Sustainable investment boom
Updated on Wednesday, 8 September 2021 – 01:34
The Public Treasury joins the race for green financing half a year after Italy
Renfe train on the tracks near Navalmoral de la Mata (Cceres).
Spain has fully entered the race for the financing greenwhen closing yesterday the emission of 5,000 million euros with a demand that multiplied that amount by 12. The fever for sustainable debt materialized in the operation led yesterday by the Public Treasury despite the fact that other countries such as Italy, Germany or France They have already been months ahead of him.
The Spanish issuance offered around 5,000 million euros in a 20-year bond for which a demand greater than 60,000 million euros. The figure proves well the interest of investors and markets in these types of bonds, which tend to have longer maturities and sustainable financing objectives.
In this case, the Public Treasury plans to allocate 71% of the funds raised to promote clean transportation, especially by rail, as reported by Servimedia. 12% will go to projects to improve the sustainable management of water and wastewater, and 5% to investments for the protection and restoration of biodiversity. Part of these funds will also be earmarked for adaptation to climate change, renewable energy, prevention and control of pollution and the circular economy, and efficient energy.
Yesterday was the first green bond issuance carried out by Spain, whose execution was previously planned but was postponed due to the Covid-19 crisis. It is part of the Treasury financing strategy and in it the Executive has identified more than€ 13.6 billion of green investment eligible to finance projects aimed at mitigating and adapting to climate change, the sustainable use and protection of water and maritime resources, the transition to a circular economy, the prevention and control of pollution, and the protection and recovery of biodiversity and ecosystems, as set out in the Green Bond Framework presented last August by the Ministry of Economic Affairs.
The high demand for Spanish issuance, as occurred in the cases of other European countries, is a good account of the growing interest of investors in products and investments linked to ESG criteria. Governments, aware of this interest, try to jump on the sustainability bandwagon to improve your financing conditions at a time when indebtedness has been key to coping with the Covid-19 crisis.
The issue comes half a year after Italy launched its first green bond; It was last March and on that occasion the expiration period was 24 years. Shortly after, it was the turn of France and Germany, while other countries such as the United Kingdom and the United States plan to do so in the coming weeks.
“The timing of operations in 2021 makes sense. The signatories to the Paris Agreement on Climate Change at COP21 will want to show the progress they are making on their commitments on climate change before COP26 in November. At the same time, there is There is a lot of demand for an inaugural agreement of this type and it may even represent a small greenium for Spain, as the sustainable financing market has grown at a record rate. The maturity period is consistent with previous agreements from Italy, France and Germany “, aim Mitch Reznick, rResponsible for Sustainable Fixed Income of the international business of Federated Hermes.
“A good track record of successful issuances under these conditions could help further improve the credit profile, broaden the investor base, attract long-term investors and extend the average debt maturity,” he explains. Giulia Branz, an analyst at the rating agency Scope Ratings.
“From a credit point of view, increased market monitoring and reporting requirements related to green finance frameworks that issuers must meet for these types of issues can contribute positively to long-term risk budgeting. related to ESG, including around investments to cope with climate change and the transition to a more sustainable economy, “he adds.
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