Italian utility firm A2A has become the first company to issue a green bond compliant with the new European Green Bond Standard, which was implemented in December.
The firm issued a €500m 10 year bond whose proceeds will be entirely aligned with the EU’s Taxonomy defining sustainable activities. It was rated as AA2A by Moody’s and received a BBB rating from Standard & Poor’s.
The issuance was met with strong investor demand, being more than four times oversubscribed, according to A2A. This could bode well for future issuances, said Johann Ple, senior portfolio manager, Fixed-Income at AXA IM:
"The EuGB received overwhelming demand, with order books exceeding €3.7bn, and was priced slightly below fair value at ms+125 from an initial guidance at ms+165. This strong investor demand bodes well for the EU Green Bond standard future issuances, with Ile de France Mobilité expected to follow suit soon. However, it's notable that most corporate issuances have seen strong demand this year, leading to the disappearance of new issue premiums” he added.
Europe is already the largest market for green bonds but so far, issuers only had to comply with voluntary initiatives such as criteria set by the Climate Bonds Initiative or the Green Bond Principles. In setting its own standard, the EU hopes to cement its position as the biggest issuer of sustainable debt. In 2021, the European Commission has set a target of issuing €250bn of Green Bonds by 2026.
