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UPDATE 1-France follows in Poland's slipstream with inaugural Green bond
January 3, 2017 / 10:07 AM / a year ago

UPDATE 1-France follows in Poland's slipstream with inaugural Green bond

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By Tom Porter

LONDON, Jan 3 (IFR) - The Republic of France has mandated banks to lead manage an inaugural Green bond, the second such deal from a sovereign issuer.

Credit Agricole, which is sole structuring advisor, and Morgan Stanley will arrange a series of investor calls and meetings to introduce the sovereign’s Green bond framework.

The euro-denominated trade will be issued in the 15 to 25-year part of the curve and will follow a roadshow starting January 6.

Government agencies, corporates and banks issued US$81bn-equivalent in the Green format in 2016, according to the Climate Bonds Initiative. Yet, until a 750m five-year from the Republic of Poland in December 2016, sovereigns had been notably absent from the asset class.

The issuer’s first sovereign Green bond issue did not appear to offer a pricing benefit against its vanilla curve, though it brought new investors to the issuer.

A lead on France’s debut would not be drawn on whether the sovereign could expect a pricing benefit but said the Green aspects of the deal would likely pull in more investors than a standard OAT print.

“The Poland deal was relatively small and relatively short,” said the banker. “The key point here is that this is an OAT; the format is the same and it will be targeting benchmark size for an OAT.”

France’s implied 15-year yield went up in secondary trading following the announcement on Tuesday morning, from 1.05% to 1.13%, according Tradeweb data.

The same banker said the country’s 20-year spreads were around 20bp over mid-swaps and its 30-year spreads in the low 40bp area over mid-swaps on Tuesday morning in London.

Barclays, BNP Paribas, Credit Agricole, Morgan Stanley, Natixis and Societe Generale are joint lead managers.

France is rated Aa2/AA/AA/AAA. (Reporting by Tom Porter, Editing by Helene Durand, Philip Wright)

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