In January the National Treasury Management Agency (NTMA) raised €3.5 billion through the syndicated sale of a new 20-year Irish Sovereign Green Bond (ISGB) maturing in October 2043. Cantor Fitzgerald Ireland was delighted to be joint lead manager along with BNP Paribas, BofA Securities, Danske Bank, Deutsche Bank and Nomura.
With strong demand and just under 300 institutional investors, the total order book was in excess of €35 billion. The funds were raised at a yield of 3.106%. The largest distribution went to the Benelux at 20%, Germany/Austria/Switzerland combined took 20%, followed by the Nordics at 13%. The UK and Italy accounted for 10% each, France 9% and other European countries together accounted for 11%. Domestic investors took 4%, and the Americas and the Rest of the World took 3%.
The main investor categories were fund managers 43%, followed by banks 31%, insurance and pension funds 18%, official institutions 7%, and hedge funds 2%. ESG investors made up circa 70% of the final allocations. Green bonds now account for over 7% of Ireland’s total benchmark bonds.
With relatively low levels of maturing debt this year, an anticipated Exchequer surplus, and strong cash balances, the NTMA is now expected to issue towards the bottom end of the stated €7-11 billion target funding range. Following the €3.5 billion transaction, the NTMA is likely to have completed almost 50% of its funding for the year.
The growth of the green debt market has seen $2 trillion of green bonds issued globally to date . The NTMA has issued €10.35 billion of green bonds since 2018 further building out the Irish sovereign green curve with the new 20-year green bond. This source of private green financing will enhance Ireland’s transition towards reaching its goals of a 51% reduction in emissions (against 2018 levels) by 2030 and net zero by 2050. These targets were set in 2018 and are consistent with the Paris Agreement, where Governments signed up to reduce their emissions and the impact of climate change on their economies.
Ireland’s emissions have been on an upward trend recently – increasing by 4.7% in 2021 compared to 2020  – reinforcing the need for green finance. Ireland’s approach to climate action has been getting more ambitious over the past few years – the Climate Action and Low Carbon Development (Amendment) Bill 2021 supports Ireland’s transition to a net zero economy. One of the key elements of this Bill includes the requirement for Ireland’s Climate Action Plan to be updated on an annual basis. The most recent Climate Action Plan (2023) sets out the pillars to reduce emissions across all sectors of the economy. One of the main pillars is the acceleration of renewable electricity generation, predominantly via the delivery of offshore and onshore wind as well as solar power – this will support the achievement of a 75% reduction in Ireland’s energy related emissions by 2030.
The ISGB Framework lists six eligible categories of ‘green projects’, including sustainable water and wastewater management, clean transportation, management of natural resources, built environment/energy efficiency, climate change adaptation and renewable energy. These categories of green projects support the pillars and actions set out in the Climate Action Plan 2023 and Ireland’s path to net zero. Out of the ISGB proceeds in 2021, the majority (62%) were allocated towards clean transportation projects with the remaining allocated to a number of other categories including sustainable water and waste management (25.9%) and management of natural resources (7.6%). It is expected that almost €2.5 billion of allocations from the new green bond will be available for ‘eligible green projects’ in 2023.
The NTMA will continue to develop the market for ISGBs and are an essential tool to drive green financing and enable private investors to support the achievement of Ireland’s climate goals.