Agence France Trésor announced today that it has successfully syndicated France's first green sovereign bond indexed to the harmonised European consumer price index (excluding tobacco): the Green OAT€i 0.10% 25 July 2038.
This 15-year benchmark bond, with a 16-year initial residual maturity, was issued at a price of 108.62 reflecting a real yield of -0.415%, for an amount of €4bn. This transaction brings the outstanding amount of Green OATs issued to date to €49.4 bn.
After the opening of the order book on Wednesday 25 May early morning and its completion at midday, total demand reached more than €27bn, of which €4bn were allocated.
Lead managers for this operation were Barclays, BNP Paribas, Crédit Agricole CIB, Natixis and Société Générale. All primary dealers were part of the syndicate.
In terms of geographical origins, the allocation illustrates the diversity and the quality of the investor base of this new bond. Nearly 230 final investors took part in the operation. The syndicated amount has been allocated to banks for 29%, asset managers for 28%, pension funds for 15%, official institutions for 14%, insurers for 10% and hedge funds for 5%. According to the lead managers, more than half of the bonds were allocated to green investors.
The geographical distribution of investors shows strong domestic and international demand, especially in the eurozone countries representing the majority of the allocation: investors from France (29%), Italy (8%), Germany (4%) and other countries from the eurozone (16%). The remaining investors come from the United Kingdom (20%), Nordic countries (12%), Asia (7%) and other European countries (3%). The proportion of investors from the rest of the world amounts to 1%.
The settlement date for the Green OAT€i is 1 June 2022. The bond will be strippable and quoted on Euronext Paris. It will be tapped to guarantee sufficient market liquidity, depending on market demand, up to the limit of Eligible Green Expenditures.
Framework for France’s Green Bonds
Green OATs target State budget spending on climate change mitigation, adaptation to climate change, biodiversity protection and pollution control, in line with the Energy Transition and Green Growth Act and France's commitment to implement the Paris Agreement. The selection grid for Green Eligible Expenditures is defined in the framework document for the State's green bonds. An annex has been added to this framework document in order to take into account the specificities of indexed Green OATs.
The amount of Green Eligible Expenditures to which the State's 2022 green bond issues will be matched will amount to €15bn for the year 2022. In line with the Annex to the Framework Document, €4.27bn of Green Eligible Expenditures will match this issue.
AFT will ensure the liquidity of this new green OAT through top-ups after the inaugural issue, as for traditional OATs. The outstanding amount of this Green OAT will grow accordingly. In addition, AFT will continue to tap its first green bond, OAT 1.75% 25 June 2039 and OAT 0,50 % 25 June 2044, whose outstanding amount currently stands at €45.1bn, in response to investor demand. All of these issues will be within the limit of the amount of Green Eligible Expenditures.
The State's Green OATs will continue to contribute to the financing programme defined in the initial Budget Act for 2022 in the same way as the other OATs.
For more complete information about the Green OATs, visit the Agence France Trésor’s website.
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