Austria is set to become the latest sovereign to debut in the green bond market, with some corners of it forecasting a sharp turnaround in what has been lacklustre eurozone sovereign issuance of the product so far this year.
Austria is due to speak to investors on May 19, putting the call well clear of an expected dual tranche trade from the European Union this week that will dominate investor attention. JP Morgan and UniCredit are arranging Austria's calls.
So far this week, only The State of Lower Saxony has poked its head above the parapet in euros. The German region has mandated for a long seven year trade that is likely to come on Tuesday. Commerzbank, Helaba, NordLB and TD Securities are running that trade.
Austria joins an increasingly full club of European sovereigns issuing green bonds. Last year, Italy, Spain and Serbia printed their debut green bonds, after Germany issued its first deal in the structure in 2020. France and the UK are more regular faces in the green bond market, as are Ireland, Belgium and the Netherlands.
Nothing new yet
However, this year there have been no new green bonds from sovereigns at all. This borrower group has only issued €7bn of green bonds this year through taps and auctions, well down on the €20bn issued this time last year.
“We expect a catch-up,” said Ninon Bachet, euro rates strategist at Société Générale, who said around €54bn of eurozone sovereign green bonds were printed in 2021. “We expect at least €40bn to €60bn of [sovereign] green bond issuance this year.”
Austria’s debut is part of Bachet’s forecast, as is a debut from Greece.
“Belgium, Germany and maybe France will issue new benchmarks,” she added, “and all issuers will continue to provide liquidity to their green curves.”
France will print a maximum of €15bn in green bonds this year, Germany a maximum of €12.5bn and the Netherlands €5bn.
“Assuming similar volumes as in 2021 for countries that have not given an indication,” said Bachet, “€40bn to €60bn seems a reasonable issuance range, with a bias to the higher end of the range.”
