Sunday, July 3

Germany raises 4 bln euros from 30-year green bond tap – leads

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Germany raised 4 billion-euros from the reopening of its 30-year green bond on Wednesday, memos from two lead managers seen by Reuters showed.

The bond priced for a yield of 1.365%, or 2 basis points below Germany’s conventional bond due Aug. 15, 2050, the green bond’s twin, the memos said.

Germany’s green bonds are all twinned with an otherwise identical conventional bond, allowing investors to switch between the two to mitigate liquidity concerns.

The yield difference between the twin and the green bond is essentially the “greenium” – the slightly lower yield on the green bond versus conventional debt due to high demand.

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The issuance saw over 10.7 billion euros of demand based on the final terms, including 3.25 billion euros from the lead managers, one of the lead managers said, down from the more than 15.8 billion euros of demand flagged at an earlier stage in the sale in a memo seen by Reuters.

It was the first time Germany reopened the 30-year green bond, which it originally issued in May 2021, raising 6 billion euros.

Analysts note that greeniums on some German green bonds and some of the green bonds from other euro zone governments have declined of late in the secondary market, citing market volatility, lower liquidity in green bonds and a lack of appetite for longer-dated debt.

But the 2 basis point greenium Germany achieved on Wednesday was equal to what it achieved on the original tranche back in 2021.

Germany hired Barclays, Commerzbank, Credit Agricole, HSBC, Morgan Stanley and Nomura to lead the deal.

($1 = 0.9321 euros) (Reporting by Yoruk Bahceli Editing by Danilo Masoni and Mark Potter)