First Issuance of Green Bonds by the French State

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On 24 January 2017, France issued its first sovereign green bonds for an amount of €7 billion, with a maturity of 22 years and a yield at issue of 1.741 percent. The French sovereign issuance was fully allocated with total bids for more than €23 billion at midday on the day of issuance. Over the last three years, there has been a growing demand for green bonds from all types of issuers (financial institutions including commercial and development banks, both large and small companies, sovereign and sub-sovereign).

The French issuance followed the Green Bonds Principles ("GBP"), developed by the International Capital Markets Association in their current version dated 16 June 2016. These are the mostly commonly adopted rules by issuers, and they are typically accompanied by an analysis from an environmental third-party auditor. Pursuant to the GBP, a bond is considered "green" if: (i) the issuance proceeds are used solely to finance projects that have a positive environmental impact; (ii) the issuer establishes a process for project evaluation and selection within the eligible green projects categories; (iii) the net proceeds of the bonds are tracked in an appropriate manner and certified internally or by an external auditor and (iv) ongoing reporting is made available with updated information on the use of proceeds and the allocated amounts.

The well-subscribed issue by the French State again shows that green bonds remain very attractive for issuers due to strong investor appetite and the flexible legal framework provided by the GBP guidelines.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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