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UK's first 'green gilt' sale raises £10bn

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UK's first 'green gilt' sale sees record demand
Green Gilts will raise a minimum of £15bn for green government projects like zero-emissions buses and offshore wind. Photo: Phil Noble/Reuters

Investors queued up to buy the UK's inaugural green gilt on Tuesday in London, raising £10bn ($13.7bn) in the highest ever government bond sale. 

The Treasury said the 12-year bond will help drive progress to net zero and create jobs across the UK.

The sale had the largest ever order book for a sovereign green transaction and will be followed by a second issuance later in the year. 

Green Gilts will raise a minimum of £15bn for green government projects like zero-emissions buses, offshore wind, and schemes to decarbonise homes and buildings in this financial year.

Read more: Green homes could cut energy bills and give UK economy £10bn boost

The UK follows many other European nations into the green bonds market. Earlier this month Spain launched a €5bn ($5.86bn, £4.3bn) bond sale. Austria was also due to raise €1.61bn from bonds due 2031 and 2037, and Germany re-opened inflation-linked bonds due 2030 and 2046 to raise €700m.

“Green finance is vital in helping us to tackle the environmental challenges we face, and the launch of our first green bond is a signal that the UK continues to be a world leader in this area," said UK chancellor Rishi Sunak. 

Government bonds, or gilts, are sold to institutional investors and provide a fixed rate of return until their expiry. The UK’s inaugural Green Gilt is a 12-year bond, maturing on 31 July 2033.

And in a first among comparable sovereign issuers, the UK has committed to reporting on both the environmental impact, and the important social co-benefits of green expenditures financed by Green Gilts, such as job creation, access to affordable infrastructure and socioeconomic advancement.

Read more: Businesses return £1.3bn in furlough cash

The Green Gilt will be followed later in the year by the world’s first standalone retail Green Savings Bonds, issued by NS&I.

These two products will give UK investors and savers the opportunity to join the collective fight against climate change while creating green jobs across the country.

Watch: Off-shore wind farms provide promising roadmap for more clean energy

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