Latvia issues eight-year sustainability bonds

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On Monday, the State Treasury issued Latvia's first sustainability Eurobonds with a maturity of eight years, raising funding of €600 million with a yield of 0.263% and establishing a fixed coupon rate of 0.25%, the Ministry of Finance said December 6.

Bonds are issued “to support sustainable development in Latvia and to raise funding for measures and priorities aimed at mitigating the negative impacts of climate change, moving towards climate neutrality, and increasing prosperity,” said the FM statement.

With this borrowing, Latvia will face “global climate challenges, with the support of sustainable financial instruments strengthening the path to the development of a climate-neutral and socially responsible economy, which aims to address the most effective long-term climate, environmental and social policies and their impact on future generations”.

The establishment of a bond framework, which is a mandatory condition for the issuance of sustainable bonds, was ensured by a working group chaired by the Ministry of Finance, representing the Ministry of Environmental Protection and Regional Development, Ministry of Economics, Ministry of Agriculture, Ministry of Transport, Ministry of Welfare, Ministry of Interior, Ministry of Education and Science and the Cross-Sectoral Coordination Centre.

According to the FM, the framework of the sustainability bonds “internationally demonstrates Latvia's strong commitment to achieving the stated objectives for climate change mitigation and climate neutrality in 2050, contributing to the achievement of the European and global climate goals”.

It is planned to extend the resources received as a result of the issuance of sustainability bonds to the state budget expenditure carried out and planned in 2020-2022 for ensuring environmentally friendly transport, the preservation of Latvian forests, waters, biodiversity, reducing inequalities and poverty, and other measures aimed at achieving sustainable development objectives.

The leading banks of sustainability bond issuance were Barclays, BNP Paribas, and Credit Agricole CIB. The bonds were purchased by more than 110 investors, mainly asset managers from European countries, with investors' total demand above €2.5 billion.

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