Oct 21 (Reuters) - Portugal's government is exploring the sale of a green bond and has identified around half of the expenditures it could potentially finance, Portugal's debt management agency head told Reuters.
In recent years, many European sovereigns, from Germany to Italy, have issued green bonds that fund a range of environmentally-beneficial projects, from clean transportation to renewable energy.
A green bond issuance is "definitely on the agenda and we are working hard to put it together," Miguel Martin, recently appointed to head Portugal's debt agency, said.
Martin said the government has not made a formal commitment to the issuance, but had asked departments to report any projects that could be financed by a green bond.
Rui Amaral, a board member at the debt agency, said an issuance would need to be benchmark-sized, which means around 3 billion euros ($2.93 billion) for Portugal.
Since 2020, Germany, Italy, Britain, Spain and Austria have launched green bond programmes, meaning there are just few Western European issuers left not selling such debt.
"We are working in the back office trying to understand what is the schedule, trying to assess what are the stakeholders that need to be associated with a green bond, both internally in the administration, also externally in terms of a legal advisor, who will be the bank that will help us throughout the process. All of that is being assessed," Martin said.
Roughly half of the potential benchmark issuance amount has been identified in green projects, Martin said.
He added that the challenge for Portugal in finding expenditures to fund through a green government bond is that the private sector has already taken a lead in funding green initiatives.
Another challenge, Martin said, is that Portugal is also a big beneficiary of the European Union's COVID-19 recovery fund, some of which will finance green expenditures that could have otherwise been funded by national governments.
To identify projects that the government could finance through a green bond, "you enter into a level of granularity that I would say is relatively bigger than other countries in order for us to have a sizable green bond issuance that would meet market expectations," Martin said.
Portugal is expected to receive more than 16 billion euros in grants and loans from the EU's up-to 800 billion euro recovery fund. The EU aims to fund a third of the recovery fund through its own green bonds to finance member states' green projects.
Some $8.6 billion of green bonds issued by Portuguese entities were outstanding by the first half of the year, according to the Climate Bonds Initiative, an amount comparable to the government's own net funding needs for this year.
($1 = 1.0245 euros)
Reporting by Yoruk Bahceli; editing by Dhara Ranasinghe and Toby Chopra
Our Standards: The Thomson Reuters Trust Principles.
The Link LonkOctober 21, 2022 at 05:56PM
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Portugal "working hard" to sell green bond - debt officials - Reuters
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