France Seeks 20 Billion Euros for Green Projects in Bond Market

  • Initial green bond targeting at least 2.5 billion euros
  • Further issuance will follow inaugural deal over 2-3 years

France plans to issue more than 20 billion euros ($21 billion) within three years of a class of bond that specifies proceeds must be used for environmental projects in areas like renewable energy, the head of the country’s debt agency said.

An initial offer of so-called green bonds that began marketing last week, will raise at least 2.5 billion euros, Anthony Requin, Chief Executive of Agence France Tresor, the government office handling debt issuance, said in an interview in London. Further sales will follow, amounting to 20 billion euros "over two to three years including 2017," he said.

France has placed itself at the vanguard of international efforts to tackle climate change and hosted the international talks in Paris that led to an accord committing more than 190 nations to cut greenhouse emissions. The deal marks the second use of green bonds by a sovereign issuer following Poland’s 750 million euro sale in December.

The French government has identified 13 billion euros in "green expenditures" this year and may issue as much as 11 billion euros by year end, Requin said.

"All those programs, financed through the state general budget, will back our green bond issuances," he said.

"Compared to Poland, France will clearly offer a much higher liquidity," said Sylvain de Bus, a senior asset manager at Candriam Belgium SA who bought some of the Polish green notes. "It will also improve the depth of sovereign green bonds while giving an important sign to other sovereign issuers. I’m convinced, if valuations are correct, that there will be a marked interest from investors."

Requin’s comments follow a statement by French Finance Minister Michel Sapin who said earlier this month the government expected the green bond market to promote "climate awareness by all actors, bankers, companies and states."

France is committed to a European Union target to cut greenhouse levels by 40 percent from 1990 levels by 2030.

It has hired Barclays Plc, BNP Paribas SA, Credit Agricole SA, Morgan Stanley, Natixis SA and Societe Generale SA to manage the sale, holding investor meetings until Jan. 20.

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