Spain launches first ever green bond

Sept 7 (Reuters) – Spain was set to launch its first ever green bond on Tuesday, leading a flurry of such issuances expected in September.

The 20-year bond sale will raise 5 billion euros, according to IFR, in line with expectations laid out by the Spanish Treasury in an investor meeting in July.

The deal received initial demand of 38.5 billion euros and price guidance is for it to offer a spread of around 9 basis points over an outstanding Spanish bond due on Oct 2040, IFR said.

Spain joins a growing club of European states which have issued green debt this year to finance environmentally beneficial expenditures, as demand for such assets continues to boom.

Further issuance is expected. The European Union will present its green bond framework later on Tuesday ahead of the start of its issuance in the format to fund part of its coronavirus recovery fund, while Germany will sell its fourth green bond in an auction on Wednesday.

Britain will sell its first green bond in the week of Sept. 20 after hiring banks on Friday.

The broader euro area bond market was steady in early Tuesday trade, with all focus on Thursday’s European Central Bank meeting, where investors will focus on the pace of the bank’s pandemic emergency bond purchases (PEPP) during the fourth quarter.

That has grown in focus as a number of hawkish statements from policymakers put pressure on bond prices last week.

At 1300 GMT, the ECB will release data for its bond buying in August alongside regular weekly data.

In the broader market, Germany’s 10-year yield rose to a seven-week high at -0.338% in early trade and was up 2 basis points on the day at -0.35% by 0750 GMT.

“With the ECB meeting approaching fast, we expect yields to drift higher into Thursday, driven by supply,” ING analysts told clients.

In addition to Spain’s deal, which is being sold directly to end investors via a syndicate of banks, Austria was due to raise 1.61 billion euros from bonds due 2031 and 2037, and Germany will re-open inflation-linked bonds due 2030 and 2046 to raise 700 million euros on Tuesday in auctions.

Investors will also watch the ZEW economic sentiment survey and revised second quarter GDP reading for the euro zone at 0900 GMT.

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