The Austrian Treasury is planning to issue commercial paper next year to fund green projects, following the issuance of its first green treasury bill (ATB) a few days ago, and of green bonds earlier this year.
“Commercial paper can be issued in various currencies but on a bilateral basis, and may attract different types of investors because of this aspect,” Christian Schreckeis, head of issuance and portfolio management at the Austrian Treasury, told IPE.
Austria aims to fund 80% of green eligible expenditures, amounting to more than €5bn per year, through long-term instruments such as bonds and loans, and 20% through bills and commercial paper, he said.
Austria has raised €1bn with the first issuance of green treasury bill (ATB) on 18 October, carrying yield of 1.25% per year, and with a maturity on 23 February next year, including a greenium (yield difference to comparable non-green bills) of 2bp, the Treasury said.
The issuance – based on the country’s green bond framework – was well received by investors being 2.7 times oversubscribed.
The proceeds will be invested in climate and environmental projects, tracked after issuance in regular allocation and impact reports, the treasury said.
“For the inaugural green T-bill we have chosen a four-month maturity. We intend to roll the green bills regularly, so investors can buy the new bill when the old ones mature. We intend to roll the green bills regularly, for example every three months,” Schreckeis said.
It is the first issuance of a treasury bill in green format by a country globally, a novelty for the ESG market, the treasury said, noting that its approach is based on a broad offer of green securities.
“The green market has so far been focused mostly on bonds, and within this segment mostly on long-term maturities, Schreckeis said.
He added: “There was a missing link of a short-dated green financial instrument. During our roadshow with investors for the inaugural green bonds in May we had lots of discussions with ESG investors and they told us they would like to buy green short-term instruments but that there was no supply in this format.”
The Austrian Treasury issued a €4bn in green bonds in May, with an annual coupon of 1.85% and maturity in 2049, aligned with the EU taxonomy and the UN Sustainable Development Goals (SDGs).
The proceeds from the green bond issuance will fund projects in the fields of clean transportation, renewable energy, energy efficiency, pollution prevention and control, environmentally sustainable management of living natural resources and land use, climate change adaptation, biodiversity, and water and wastewater management, according to the green bond framework.
The framework is applied for the issuance of green debt securities including government bonds, green treasury bills and green commercial papers.