The UK has launched its Green Gilt, with final price terms having been announced at +7.5bps against the 2032 Gilt.
Mark Healy, portfolio manager, AXA Investment Managers, said the firm believes the deal is “fairly priced for the inaugural green gilt issue” and said it generated “strong investor interest judging by the size of the order book”– in excess of £100 billion.
Healy continued: “The green issuance is in line with our climate framework and market standards. The eligible project categories are directly linked to the green strategy of the UK, with the issuer committing to publish all relevant output and impact KPIs, including those related to associated social co-benefits of green projects. Moreover, the green projects impact reporting has been developed in cooperation with external experts showing the time and resources that have been used to develop the gilt.
Matthew Amis, investment director, rates management, ASI, said the asset manager congratulated the Debt Management Office on the successful introduction of a green gilt into the UK gilt market and said it expected future issuance of green gilts “as the UK looks to expand the scope of maturities available to investors seeking greener investments.
He said that taking into account “the huge demand [and] the slim allocations (relative to a brown gilt syndication)” the asset manager expected the gilt “to perform well in the coming days and months.
“This will be aided by no further issuance of this 10yr green gilt until Q1 2022.”
On buying into the issuance, Amis added: “We do not take the simple labelling of a bond as ‘green/ social / sustainability’ at face value when considering whether to participate in an issue.
“We do see long term value in the use of labeling of bonds; however, we are not reliant on these labels. We would prefer a non-labeled sovereign bond issued by a Paris-aligned, credible sovereign over a green sovereign bond where the project may cause longer term negative implications.
“What matters to us is the use of proceeds. In this case we are encouraged by the creation of a separate General Account by HM Treasury where the proceeds will be held and tracked. Information contained with the Green Register also allows investors to track expenditure towards eligible investments.”
Mark Healy concluded: “The new launch is a hugely positive step for the UK government and, as part of the UK Government’s Green Financing framework, shows commitment to becoming a leader in combating climate change.”
