Agence France Trésor (AFT), France’s debt and cash management agency, issued the first ever inflation-linked sovereign green bond.
The the Green OAT (Obligations Assimilables Du Trésor), due in July 2038, was valued at €3 billion with strong demand.
The order book was nearly 7x oversubscribed at over €27 billion. More than 220 investors participated in the transaction, with over half of the allocation going to green investors.
Lead managers on the deal included Barclays, BNP Paribas, Crédit Agricole CIB, Natixis and Société Générale.
It was priced at a real return of -0.926%, “the lowest level of real rate ever observed” in a syndicated OAT, according to AFT’s statement.
The value of the bond is protected against inflation through harmonisation with the European consumer price index (excluding tobacco).
France was the first country to issue a sovereign benchmark green bond, with its inaugural €7 billion issuance in 2017. Following the new offering, Green OAT issuance to date stands at nearly €50 billion.
The bond was issued under France’s “Framework for the Green OAT,” detailing eligible areas of investment from funds from green bond offerings.
AFT stated that green bond-funded expenditures this year will total €15 billion, with investments in areas including climate change mitigation, adaptation to climate change, biodiversity protection and pollution control.
“AFT, who has always been at the forefront of innovation, is bringing another milestone in the development of the green bond market by issuing the first ever inflation linked green bond and therefor meeting investor demand at a time when the need to protect investments from higher inflation is at the top of asset managers agenda,” said Pierre Blandin, managing director and head of debt capital markets Sovereigns Supranationals Agencies at Crédit Agricole CIB.
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