EU launches first green bond with record demand

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Vehicles pass the European Commission headquarters in Brussels, Belgium, Oct. 8, 2021. [Photo/Xinhua]

The European Commission on Tuesday issued the first NextGenerationEU green bond, raising 12 billion euros (13.8 billion U.S. dollars) to be allocated exclusively to green and sustainable investments across the European Union (EU).

A wide range of investors have expressed interest in the bond. The final order book was over 135 billion euros, which meant that the bond has been more than 11 times oversubscribed. This was the largest green bond orderbook ever in global capital markets, the largest green bond ever issued, and the EU is set to become the world's largest green bond issuer by far, according to Johannes Hahn, commissioner in charge of budget and administration.

Today's issuance, which followed the adoption of the NextGenerationEU Green Bond framework earlier in September, represents a start to the NextGenerationEU green bond program of up to 250 billion euros by end-2026.

The funds from the NextGenerationEU green bond issuance will be used to finance green and sustainable expenditure under the Recovery and Resilience Facility. A minimum of 37 percent of each national Recovery and Resilience Plan has to be devoted to the green transition.

"Today's issuance is a strong start for the NextGenerationEU green bond program. Set to turn the EU into the world's biggest green bond issuer, it is a powerful signal of the EU's commitment to sustainability," Hahn told a press conference.

"Our future is green and it is extremely important that we seize the opportunity to clearly show to investors that their funds will be used to finance a sustainable European recovery," Hahn said.

NextGenerationEU is a temporary recovery instrument of more than 800 billion euros in current prices to support Europe's recovery from the coronavirus pandemic and help build a greener, more digital and more resilient Europe. To finance NextGenerationEU, the European Commission -- on behalf of the EU -- will raise up to 800 billion euros from the capital markets between now and the end of 2026. (1 euro = 1.15 U.S. dollars)

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