Denmark Makes History With First EuGB Green Bond
Denmark has made history by issuing its first sovereign green bond under the new EuGB label. The DKK 7bn (£800m) issuance was a resounding success, attracting strong investor demand and marking a significant step in Europe's green finance journey.
The bond, which was the first by a sovereign under the new EuGB label, required full alignment with the EU taxonomy. It will finance sustainable land use, renewable energy, and clean transportation projects in Denmark. Domestic investors led the way, accounting for around 75% of allocations, with Asia and the UK showing strong overseas interest.
Asset managers were the largest buyers, snapping up 42% of the bonds, followed by pension funds and other institutions (27%), and banks (22%). The issuance was structured as a twin bond, with a conventional and a green bond issued simultaneously, offering investors the option to convert green bonds into conventional counterparts.
The deal saw a greenium of 1.5 basis points, reflecting the strong investor appetite for sustainable investments. This trend is part of a broader shift in the EU green bond market, where governments accounted for 4.2% of all issuance in 2024, with corporates making up 58.8%. The German government led the way among EU issuers in 2024, significantly increasing its share compared to 2020.
Denmark's inaugural EuGB issuance has set a positive precedent for other European countries looking to tap into the growing demand for green bonds. The successful deal demonstrates the potential of sustainable finance to drive investment in crucial green projects, while also offering investors attractive returns.
