Cyprus launched its first sustainable bond on Tuesday as governments took advantage of high demand for such assets following weeks of wild swings in bond markets.
According to the country’s debt office, Cyprus raised 1 billion euros from its first sustainable bond, becoming the latest European government to enter the market.
The deal received more than 12 billion euros of demand, a record for Cyprus, Stelios Leonidou, who manages Cyprus’s debt issuance, told Reuters.
“This is the biggest (investor order) book we’ve had ever, in a year when market conditions for issuing sovereign bonds have not been as good as last year,” he said.
Green bonds and other environmental, social and governance (ESG) focused assets help borrowers tap an additional pool of sustainability investors focused exclusively on such assets, which can help boost demand in volatile markets and provide a pricing advantage.
Sustainable bonds are a broader form ESG debt, proceeds from which can be spent on both green and social projects.
Cyprus follows a number of smaller countries including Slovenia and Luxembourg opting for sustainable bonds as they often struggle to find enough projects to back standalone green bonds.
The 10-year bond, which matures on 13 April 2033, was priced at a yield of 4.219%.
Leonidou said Cyprus expects to sell sustainable bonds every two or three years going forward.
(Reuters)