Green sovereign bonds: tactical moves on an emerging market

We already knew the greenback, here come the green bonds. This emerging security, whose yearly issuance still represents only 1% of the global bonds market, has the wind in its sails. Used primarily by institutions, large companies and local authorities, it has just entered the reference segment: sovereign bonds.

China was expected to step in first, but it was France that announced, early September, the launch of the first Green sovereign bond. A political move, for sure, in line with the leading position assumed by Paris in the global energy transition since COP21. But behind this political “coup” lies a significant development: the sovereign debt is not just any segment of the bond market: it is the reference segment, whose main assets (the US 10 year or the German Bund) determine the trend. Besides, the French security was issued by Agence France Trésor, an institution that is itself a reference for its remarkable management of the (huge) French public debt. So things are getting serious.

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