Ireland’s inaugural Sovereign Green Bond transaction is a milestone for the development of the market. Through the issuance of highly liquid Green Bonds sovereign issuers can reach investors that are otherwise not willing or able to invest in smaller sized transactions typically issued by the private sector. The high visibility of Sovereign Green Bond transactions further help to raise awareness for this sector and the challenges faced during the transitions to a low carbon sustainable economy. With its inaugural Sovereign Green Bond Ireland joins other EU countries like Belgium, France and Poland in a market segment that still has significant growth potential.

Cutting CO2 emissions by 80% until 2050

Between 2018 and 2027 Ireland plans to spend a total of EUR 23bn on green projects. This is part of the country’s plan to transition to a low carbon, climate resilient and environmentally sustainable economy by 2050. The overarching goal is to cut CO2 emissions from electricity, buildings & transport by at least 80% by 2050 compared to 1990 levels.

To finance activities that help to achieve the aforementioned goals Ireland has established a Sovereign Green Bond Framework, which complies with the ICMA Green Bond Principles of 2018. The proceeds from Ireland’s Sovereign Green Bond issuance will be used for Sustainable Water and Wastewater Management, Clean Transportation, Environmentally Sustainable Management of Living Natural Resources and Land Use, Renewable Energy, Energy Efficiency and Climate Change Adaptation. The Sovereign Green Bond Framework has received a second opinion from Sustainalytics.

Generating strong demand

The inaugural Sovereign Green Bond was launched on 10 October 2018 and reached a total volume of EUR 3 billion. The high market interest generated by the transaction was reflected in close to 170 participating investors, which pushed total orders for the twelve-year bond beyond EUR 11 billion. The highly successful transaction allowed Ireland to expand its investor base and raise awareness for its goal to transition to a low carbon economy. Danske Bank acted as the only Nordic bank in the group of Joint Lead Managers and was pleased that participation from Nordic investors in the bond issuance was noticeably above the level seen in other comparable transactions.