Spain Joins Green Rush With Debut Sovereign Bond Sale

(Bloomberg) -- Spain is the latest European nation turning to a hot market for green debt as it seeks to fund projects that mitigate climate change.

The nation raised 5 billion euros ($5.9 billion) from the sale of a bond maturing in 2042 via banks Tuesday. The Treasury pulled in more than 60 billion euros of demand -- a hefty 12 times more than it offered -- after giving a so-called “Early Bird Special” that rewarded investors for placing earlier orders with a higher allocation.

With natural disasters from wildfires to floods pushing climate up the agenda, countries around the world are piling into the market to finance a greener recovery from the pandemic. Spain’s peers have drawn huge orderbooks with their sustainable offerings. 

“There is very strong demand for green sovereign issues,” said Chris Iggo, chief investment officer of core investments at AXA Investment Managers. “There has been plenty of corporate green bonds but investors need diversification. Dedicated green bond funds, broader sustainable fixed-income funds, pension funds and insurance companies are all going to be natural buyers.”

Spain’s sale kicked off a busy September for green bonds, with the Isle of Man becoming the first sovereign ethical issuer in the British currency and Germany auctioning debt this week. The European Union is set to follow next month. Nearly half the mandates in the primary market Monday were for sustainable deals, and the U.K. is also due to make a debut, which could take monthly deals to a record.

Spain mandated Barclays Plc, Banco Bilbao Vizcaya Argentaria SA, Credit Agricole SA, Deutsche Bank AG, JPMorgan Chase & Co. and Banco Santander SA to joint lead manage the sale.

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