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France to launch 'green' bond this month

Staff Writer | January 4, 2017
France aims to launch its first "green" bond by the end of the month, Finance Minister Michel Sapin said.
Michel Sapin
New bonds   France is aiming for a maturity of 15-25 years
France's government had hoped to be the first sovereign borrower to venture into the fast-growing market for so-called "green bonds".

"With this issue, the French state aims not only to finance climate and environmental policies in an innovative way, but also to help develop this market," Sapin told journalists.

What sets green bonds apart from more traditional issues is that their proceeds are earmarked for use in financing specific environmentally friendly projects or initiatives that mitigate the impact of climate change.

The French bond will be verified by a specialised agency, and an independent committee will check that the funds are being used for environmental protection.

While green bonds have been around for a decade, sovereign borrowers had been notably absent from the market, which was traditionally dominated by international development banks.

The green bond market has enjoyed strong growth in the last two years, with issuance jumping 105 percent last year alone to a record $72 billion, according to data compiled by Thomson Reuters and the Climate Bond Initiative.

France is aiming for a maturity of 15-25 years, depending on investor demand. Sapin said the aim was eventually to offer a wide range of bonds, as in the traditional bond market.