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Denmark’s Hefty Green Bond Premium Is Expected to Grow on Fund Demand

  • Country sees ‘greenium’ of 5bps, twice the level U.K. achieved
  • Bonds will become more expensive this year: Danica Pension
    

    

Photographer: Chris Ratcliffe/Bloomberg

Denmark’s debut in the green bond market made a hot start after a surge in bids led it to slash its borrowing costs versus conventional debt, with one pension-fund investor seeing this “greenium” rising further this year.

Denmark saw a premium of five basis points as it sold $760 million of its inaugural 10-year green debt via auction, after getting bids for almost five times that volume. The greenium for the AAA-rated nation was at the top end of forecasts and twice the level seen by the U.K. in its debut last year, which HSBC Holdings Plc had dubbed the biggest ever for a high-grade sovereign issuer.