Germany will introduce its first “green bond” with a multi-billion euro issue in the second half of 2020, to tap into the growing market for sustainable finance, the government’s finance department stated Thursday.
“The German Federal Government intends to assist the development of sustainable financial markets and, in particular, the green market sector by issuing Green German Government securities,” the finance department stated.
Tammo Diemer, the company’s managing director, said it could be a multi-billion euro issue, and put the amount, in billions, somewhere between an excessive-single digit to low double-digit.
More particulars will be revealed in the quarterly updates of the department’s issuance plans, Diemer added.
The “green bond”, which is a part of the government’s attempts to roll over maturing debt, will be created in the form of so-called green twin bonds.
This means that the federal government will issue “green bonds” with the same maturity and coupon as conventional securities, the department mentioned. The green twin bonds will change a part of the traditional twin bond’s auction volume, the company stated.
The step follows a settlement that was reached by EU member states earlier this month on a new set of rules governing which monetary products will be called “sustainable”.
Underneath the agreement, all financial products that claim to be green or sustainable should disclose precisely what proportion of their investments are eco-friendly.
Overall, the German government plans to borrow more money next year than it did in 2019.
Excluding inflation-linked debt, the company plans to issue 210 billion euros ($231 billion) of debt in 2020, it stated.