UK Government’s First Green Bond Smashes All Expectations

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UK Government’s First Green Bond Smashes All Expectations

The UK Government recently went to the bond market with its first green bond offering, hoping to raise GBP10 billion and was overwhelmed by the response. The 12-year bond was marketed at 87.5 basis points (0.875%) and attracted bids of more than GBP100 billion, demonstrating the appetite for investments that help the planet.

Back in 2020, the UK Government committed to started issuing green government bonds.

In its 2021 budget, the Government committed to:

  • Conduct at least two Green Gilt (gilts are the name of UK government bonds) issuances in 2021
  • Green Gilt issuance in the 2021-22 financial year will total a minimum of £15 billion
  • Issue retail Green Savings Bonds via NS&I, the first standalone retail product tied to a Sovereign Green Bond. Retail investors will be able to invest from a low minimum GBP100

The Government also committed report on social co-benefits of projects financed by the Green Gilt and retail Green Savings Bonds, such as job creation, access to affordable infrastructure and socioeconomic advancement.

The UK’s Green Financing Framework lists six types of green expenditures that will be financed by the Green Gilt and retail Green Savings Bonds:

  1. Clean Transportation
  2. Renewable Energy
  3. Energy Efficiency
  4. Pollution Prevention and Control
  5. Living and Natural Resources
  6. Climate Change Adaptation

For more information, see the UK Government website.

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Elizabeth Moran
Editorial Director
Elizabeth is a nationally-recognised independent expert on fixed income. She has more than 25 years experience in banking and financial institutions in Australia and the UK and has been published in every major Australian newspaper and investment website. Prior to becoming an independent commentator in 2019 she spent more than 10 years as the head of education and research at fixed income broker FIIG Securities. Prior to joining FIIG, Elizabeth worked as an Editor/Analyst for Rapid Ratings a quantitative credit rating agency. She also spent five years in London, three working as a credit rating analyst for NatWest Markets.

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