Luxembourg raises €1.5 bln in Europe’s first ‘sustainability’ government bond

Luxembourg became the first European government to sell a ‘sustainability’ bond on Monday, which raised 1.5 billion euros ($1.77 billion), according to a lead manager memo seen by Reuters.

The 12-year bond priced for a yield of -0.123%, according to the lead manager, on the back of investor demand for over eight times the funding raised, at over 12.5 billion euros.

Half of the proceeds will be spent on environmentally friendly ‘green’ projects and the other half on those with positive social outcomes, a spokesperson for Luxembourg’s finance ministry told Reuters.

Luxembourg’s choice of a sustainability bond is in contrast with other European governments, who have so far focused on selling ‘green’ bonds instead in their efforts to fund climate friendly spending and support the development of sustainable finance.