Germany sees 15.8 billion euros of demand for 30-year green bond tap: leads

GERMANY saw over 15.8 billion euros (S$23.2 billion) of demand for a 4 billion-euro reopening of its 30-year green bond on Wednesday (Jun 1), memos from 2 lead managers seen by Reuters showed.

The bond will pay a spread of 2 basis points below Germany's conventional bond due August 2050, which is the green bond's twin, the memos said.

Germany's green bonds are all twinned with an otherwise identical conventional bond, allowing investors to switch between the 2 to mitigate liquidity concerns.

The yield difference between the twin and the green bond is essentially the "greenium" - the slightly lower yield on the green bond versus conventional debt due to high demand.

It is the first time Germany is reopening the 30-year green bond, which it originally issued in May 2021, raising 6 billion euros.

Analysts note that greeniums on some German green bonds and some of the green bonds from other euro zone governments have declined of late in the secondary market, citing market volatility, lower liquidity in green bonds and a lack of appetite for longer-dated debt.

But the 2 basis point greenium Germany was set to achieve on Wednesday was equal to what it achieved on the original tranche back in 2021.

Germany may retain part of the issuance, earlier memos said. It hired Barclays, Commerzbank, Credit Agricole, HSBC, Morgan Stanley and Nomura to lead the deal. REUTERS