Greece prepares to issue green state bonds

So-called “green” bonds – i.e. those destined to finance environmentally friendly business activities – are increasingly shifting from the exception to the rule of issuers, especially in Europe, and the Greek state does not intend to sit this one out.

Since 2020 more and more eurozone members have been making the most of the strong investor appetite for securities with a sustainability character, thanks to the increasing focus on environmental matters and the policy swing toward the green economy.

Some Athens-listed enterprises have already made such moves (Mytilineos, Public Power Corporation, Ellaktor, Hellenic Petroleum, Terna Energy and National Bank), and such an issue is also in the Finance Ministry’s planning too. The issue of the first green sovereign bond is not expected this year, but forms part of the long-term strategy of the Public Debt Management Agency.

The focus of the European Central Bank on the green security market and on green development projects (new or existing) that the activation of the Next Generation EU fund sets as a priority opens a significant window of opportunity for Greece to join the club of those countries. Analysts tell Kathimerini that Greece could and should get on the green bond bandwagon, as early as next year.

In an analysis, Bank of America has recommended that Greece as well as the governments of Spain, Portugal, Austria and Finland take such a step immediately. It estimates that the ECB and the European Commission will encourage such moves and offer higher issue limits for green paper, thanks to their strong policy shift regarding climate change and sustainable growth.

“The structure of demand for such bonds appears to turn to more stable and quality investors in the eurozone, and this is a crucial factor for debt managers such as that of Greece,” argues BofA strategic analyst Erjon Satko to Kathimerini. He says the fact Greek debt is not investment grade does not matter, as it is an attractive market anyway, given the demand for all previous issues.

ING senior rates strategist Antoine Bouvet adds that the green bond market is mature enough for smaller issuers to tap demand.

There are further reasons for the state to issue green bonds, including the incentive that would offer the private sector for more issues of that sort.