Since the first sovereign green bond was sold back in 2016, there has been speculation over when the German government would enter the fast-growing sustainable debt market. The eurozone’s benchmark issuer borrows circa $200bn each year and its development bank, KfW, is a sustainable finance pioneer. The government’s long-awaited green debut on September 2 did not disappoint. Its Finance Agency sold €6.5bn of 10-year notes with a 0% coupon, after accumulating €30bn of demand in less than two hours.
The timing seemed ideal. Markets had re-opened strongly after the summer recess and the recent federal budget included ambitious sustainable investments in line with the EU-wide commitment to climate neutrality by 2050. But the journey had started long before and the agency was focused on a much bigger goal. “Our intention is to build an entire curve of green German federal securities up to 30 years,” explains Tammo Diemer, member of the Finance Agency’s executive board. “This first transaction is the beginning.”
