The Netherlands said it was issuing its first “green bond” on Tuesday, becoming the first top-rated country to tap into a growing market for investments in environmental projects.
It is aiming to raise between four and six billion euros ($4.5 billion to $6.7 billion) up to July 2040, according to HSBC, one of the banks handling the operation, although the Dutch government did not immediately give a figure.
The Netherlands is the fifth country to issue environmentally friendly sovereign debt after fellow EU nations Poland, France, Belgium and Ireland.
“The Netherlands is today the first triple A country to issue a green bond,” Dutch Finance Minister Wopke Hoekstra said on Twitter, referring to its international bond rating.
The Dutch finance ministry added: “With green bonds we finance green expenditures and we stimulate the green capital market. A new step towards a greener economy and a greener Netherlands.” Climate change and the environment are pressing issues for the Netherlands, where at least a third of the country lies below sea level.
Analysts said the Netherlands’ first green bond set a high bar for other countries because of its tough environmental standards.
“We are looking at this green bond with a very favourable eye, particularly because it is the first sovereign green bond with such strict conditions,” said Bram Bos, a portfolio manager at NN Investment Partners.
Hoekstra said earlier this year that these “dark green bonds” would only finance projects that meet specific criteria such as such as making a “substantial contribution to reducing CO2 emissions.” Green bonds -- where governments sell debt specifically earmarked for environmental projects -- launched a decade ago but the overall share of green instruments in global finance remains small.
They accounting for only $156.8 billion or two percent of the global bond market, according to HSBC.