Cyprus could issue its first green or sustainability bond next year and aim to raise at least €500 mln, an official from the debt management agency told Reuters.
Proposals for such a deal have been discussed but still need government approval, according to the official, who asked not to be identified.
“This is something that we are considering, but this is something that takes significant time to do,” the official said, adding that the debt management office would need to create the infrastructure to issue and track a green bond.
“It will happen, but we would have to be cautious on the timing of it.”
Green bonds are a fast-growing market where borrowers tap to fund environmentally-beneficial projects.
The official said Cyprus would look for an issue size of at least €500 mln and could also opt for a sustainability bond, proceeds of which can be spent on both green and social projects instead of a green bond.
“(An) issue particular to small countries is that it’s difficult to find enough projects to have a benchmark issuance from green alone, so we are looking into other possibilities.”
Luxembourg was the first European government to issue a sustainability bond in 2020, and Andorra and Slovenia followed last year.
European governments have shown strong interest in the green bond market as demand for environmental, social, and green assets have surged.
Germany, Britain, Italy, Spain, and the European Union issued their debut green bonds over the last two years.
Interest remains high, with Denmark issuing its first green bond this month and Greece and Austria among countries expected to follow suit. (source Reuters)