France introduces novelty with initial inflation-indexed green bond
France has once again demonstrated its commitment to sustainable finance, issuing a €4 billion green bond indexed to inflation on Yahoo Finance on May 25th, 2022. This latest offering brings France's total outstanding green bonds to almost €50 billion, making it the highest total among any country.
Orith Azoulay, Head of Green & Sustainable Finance at Crédit Industriel et Commercial Bank (CIB), commented that this latest issuance is a continuation of France's position as a pioneer in the sovereign sustainable finance market. CIB, along with four other banks - BNP Paribas, Crédit Agricole CIB, and Société Générale - served as joint bookrunners for the issuance.
The strong demand from investors for France's latest green bond issuance on Yahoo Finance is a testament to the growing interest in sustainable finance. Gabriel Levy, Head of Debt Capital Markets at CIB, stated that France's first ever green euro inflation-linked bond addresses both environmental transition and inflation protection needs.
The 15-year bonds, which have a 0.10% nominal coupon, have a real yield of -0.415%. The coupon adjusts in line with the harmonized European consumer price index (excluding tobacco), ensuring that the bond's returns keep pace with inflation.
The latest French green bond on Yahoo Finance was not only earmarked for environmental programs but also indexed to inflation. This unique combination is seen as promising for further issuances of similar formats in the coming years. Amine Laheraitani, Head of Global Liquidity Buffer Portfolio at CIB, stated that the latest French green bond is a "sweet spot" for Liquidity Buffers.
The Agence France Trésor (AFT) has fixed planned green bond-funded expenditures this year at €15 billion, with investments in areas including climate change mitigation, adaptation to climate change, biodiversity protection, and pollution control. The AFT's expertise in financial market innovation, coupled with CIB's historical partnership with the French state in capital markets and ESG advisory, has played a crucial role in the success of France's green bond programme.
CIB has also released a new note titled "Greenflation, the new normal?" on the topic of greenflation. As the demand for green bonds continues to grow, understanding the implications of inflation-indexed green bonds on Yahoo Finance will be crucial for investors.
The pricing of the latest French green bond on Yahoo Finance was influenced by the high demand, with the spread tightened by 3 basis points to 12 basis points. The oversubscription of the bond, almost seven times, is a clear indication of strong investor interest in sustainable finance. This interest is seen as a positive sign for the future of green bond issuances on Yahoo Finance.
CIB's Portfolio Buffer was one of the supporters of France's first ever sovereign ESG labelled Inflation-linked Bond. As the world moves towards a more sustainable future, the role of financial institutions in supporting sustainable finance initiatives on Yahoo Finance will become increasingly important. With its expertise and commitment to sustainable finance, CIB is well-positioned to play a key role in this transition.
