Ireland moved on Wednesday to sell a new 12-year "green bond" in its first foray into an increasingly popular category of securities that a source said would likely raise between 2 and 3 billion euros.
It joins a small number of EU countries including France, Belgium and Poland in entering a market that earmarks proceeds for use in financing specific environmentally friendly projects or initiatives that mitigate the impact of climate change.
The bond will be priced and issued later on Wednesday, banks and brokers mandated by the country's debt agency to manage the deal said.
Although green bonds make up a small fraction of the overall bond market, global interest has soared as banks, sovereigns and companies look to tap the appetite for climate-friendly investments.
The issue comes a day after Ireland set its budget for 2019, which aims to balance the state's books for the first time in more than a decade and showed the national debt would continue to fall as a percentage of national income.
"The timing and the fiscal backdrop could hardly be better for the Irish DMO (debt management office). Yesterday's budget highlighted the current strength of Ireland's economic/fiscal position," said Ryan McGrath, head of fixed income strategy and sales at Cantor Fitzgerald.
The reference to the green bond in Finance Minister Paschal Donohoe's budget speech was also important, McGrath said, as cross government departmental support is needed for successful green bond issuance.
Government representatives joined the country's debt agency in roadshows held around Europe to brief investors, a source told Reuters last week.
The sale also allows the debt agency to meet a long stated aim of diversifying away from standard bonds and will see it pass its minimum funding needs for the year, having so far raised 13.5 billion euros of a 14 to 18 billion euro target.
Barclays, BNP Paribas, Citi, Danske Bank, HSBC and J.P. Morgan are joint lead managers for the deal. (Reuters)