First Ir­ish green bond in de­mand de­spite Italy woes

Irish Independent - Business Week - - FRONT PAGE - David Chance

IRE­LAND has be­come only the fourth coun­try to is­sue a ‘green’ bond aimed at fund­ing en­vi­ron­men­tal in­vest­ments.

The Na­tional Trea­sury Man­age­ment Agency (NTMA) said it had tapped into a new pool of in­vestors, pric­ing the bond in line with what would have been ex­pected from a straight sov­er­eign bond de­spite re­newed con­cerns over Italy’s bud­get sit­u­a­tion that have roiled fi­nan­cial mar­kets.

The NTMA sold €3bn of the bonds in a deal where de­mand hit €11.25bn, and said it would likely sell an­other €1bn into the is­sue early next year. While the pro­ceeds of the bond sale will go into the gen­eral trea­sury ac­count, they will be ear­marked for green in­vest­ments,

The deal was led by banks with a strong track record in green bonds, plus Danske Bank, which opened up a Nordic client base and which has a long-stand­ing re­la­tion­ship with the Trea­sury. No Ir­ish banks or bro­kers were in­cluded in the syn­di­cate man­ag­ing the sale – mean­ing the fees in­volved went to en­ti­ties based out­side the coun­try – as the NTMA was try­ing to tap into a new client base.

NTMA debt man­age­ment direc­tor Frank O’Con­nor said the pro­ceeds from the sale can­not be used un­less there is an el­i­gi­ble green project.

The bond sale came a day af­ter Fi­nance Min­is­ter Paschal Dono­hoe de­liv­ered a bud­get that was crit­i­cised for not in­clud­ing more mea­sures to ad­dress cli­mate change, such as rais­ing du­ties on diesel and other car­bon taxes. It also came just a day af­ter the United Na­tions warned that with­out rapid ac­tion, there would be cat­a­strophic cli­mate dam­age by 2030.

Sales of green bonds have surged due to a ris­ing pool of ded­i­cated en­vi­ron­men­tal in­vest­ment funds. Poland, France and Bel­gium have al­ready is­sued en­vi­ron­men­tally-re­lated debt. The cash can be in­vested in wa­ter and waste man­age­ment, trans­port, en­ergy, the en­vi­ron­ment and projects to mit­i­gate cli­mate change.

The pro­ceeds will help fund €23bn of planned spend­ing on green projects through to 2027, which aims to help Ire­land reach its goal of cut­ting car­bon emis­sions of 80pc ver­sus 1990 lev­els by 2050 across the elec­tric­ity, built en­vi­ron­ment and trans­port.

In 2018 alone, green projects worth al­most €1.8bn have been iden­ti­fied.

Af­ter the suc­cess of the green bond, the NTMA’s Mr O’Con­nor said it would look to re­turn to dol­lar fund­ing mar­kets as well as look­ing at shorter-term bond is­sues as in­ter­est rates rose.

From 2027 on­wards, Ire­land has to start re­pay­ing loans made by the EU un­der its post-cri­sis res­cue pack­age

The money can be in­vested in green en­ergy projects such as wind farms

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