French Sovereign GB roadshow starts: they're being ambitious with size, tenor & proceeds reporting. The Year of Sovereign Green Bonds has started!

2017 couldn’t have got off to a better start with the news that the much anticipated French Sovereign Green Bond issuance will begin its roadshow on the 6th of January.

To be issued by the French Treasury, with a second opinion of the framework provided by Vigeo-Eiris (a Climate Bonds Approved Verifier), the euro-denominated offering will have tenors of between 15 and 25 years. 

Poland became the first sovereign green bond issuer in December 2016 (5 year, USD 750m), rounding off a year that saw record green bond issuance. This inaugural offering came as many other countries announced their sovereign green bond plans, including Morocco, Nigeria, Sweden and Kenya. This year is shaping up to be the year of sovereign green bond issuance.

As has been noted elsewhere, this second sovereign issuance sets a shining example for other governments planning a sovereign, both in terms of ambition and disclosure.

In terms of ambition, an interdepartmental working group has identified a staggering EUR 10bn of expenditure (from both the State budget and the Programme of Investments for the Future) as eligible for green bond allocation. More on this project evaluation and selection process can be found here (en français), but notable is that their selection uses France's TEEC label Taxonomy as guidance, which draws heavily on the Climate Bonds Taxonomy.

The level of disclosure is also very promising; the State will publish annually on the use of proceeds deployment and an ex-post environmental impacts of the financed projects. The former will be independently verified and the latter overseen by an independent Evaluation Council of international green finance experts who will define the reporting specifications / methodology in the coming months.

More analysis of this exciting bond will be included in our next Market Blog.


The wider context

The announcement of this French sovereign comes just one week after François Hollande delivered France’s long term emissions reduction plan to the UNFCCC, showing how they will meet their Paris Agreement transition to being a low carbon economy. The only other countries that have done this so far are Germany, Mexico, Canada - and the US (trying to lock in the incoming administration). We hope that these will now lead to (green) national capital raising plans to be presented at the next COP. One of the things we will be stressing throughout the coming year will be the vital role that sovereign green bonds can play in these capital raising plans.

The trends and implications of sovereign green bond issuance will be one of the many topics covered at our Climate Bonds Annual Conference on Monday March 6th. So save the date; an invite to follow shortly. 


Wishing you all a very Happy New Year!


Climate Bonds Communications Team



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