UK Government’s First “Green Gilt” Raises £10 Billion After Record Investor Interest
The UK’s first-ever “green gilt” is set to beat all previous records for British government debt sales thanks to huge investor demand.
£10 billion has been raised to go towards net-zero projects such as renewable energy, electric vehicles, pollution prevention and control, and green building infrastructure. It is estimated that investors have placed over £90 billion in orders for the 0.875% green gilt, with JPMorgan, Barclays, BNP Paribas, Citi, Deutsche Bank, and HSBC acting as bookrunners.
According to the UK Treasury, the green gilt is the largest inaugural green issuance by any sovereign and has attracted the largest-ever order book for a sovereign green transaction.
The gilts — also known as government bonds — are sold to institutional investors, proving a fixed rate of return until their expiry. The UK’s first green gilt is a 12-year bond that will mature by the end of July 2033.
The rapidly expanding green finance sector is “vital in helping us to tackle the environmental challenges we face,” Chancellor of the Exchequer Rishi Sunak said. “The launch of our first green bond is a signal that the UK continues to be a world leader in this area.”
“This funding will be used to finance vital green government projects across the country, including things like clean transportation, renewable energy and preserving our natural environment. In helping us to build back better and greener, it will also help to create jobs as we transition to net-zero.”
Following on from the government’s initial green gilt issuance, a second is set to launch next month ahead of the COP26 Climate Summit In Glasgow. The overall aim is to raise a minimum of £15 billion for green projects.