Agence France Trésor (AFT), France’s debt and cash management agency, announced the issuance of a new €4 billion green bond offering. The new bond, the Green OAT (Obligations Assimilables Du Trésor) €i 0.10% 25 July 2038 is the first ever inflation-linked sovereign green bond, with the value of the bond protected against inflation through harmonization with the European consumer price index (excluding tobacco).

The offering marks a continuation of France’s position as a pioneer in the sovereign sustainable finance market. France was the first country to issue a sovereign benchmark green bond, with its inaugural €7 billion issuance in 2017. Following the new offering, Green OAT issuance to date stands at nearly €50 billion.

The bond was issued under France’s “Framework for the Green OAT,” detailing eligible areas of investment from funds from green bond offerings. AFT stated that green bond-funded expenditures this year will total €15 billion, with investments in areas including climate change mitigation, adaptation to climate change, biodiversity protection and pollution control.

Demand for the bond was very strong, with the order book nearly 7x oversubscribed at over €27 billion. More than 220 investors participated in the transaction, with over half of the allocation going to green investors.

Lead managers on the deal included Barclays, BNP Paribas, Crédit Agricole CIB, Natixis and Société Générale.

Pierre Blandin, Managing Director and Head of Head of Debt Capital Markets SSAs at Crédit Agricole CIB, said:

“AFT, who has always been at the forefront of innovation, is bringing another milestone in the development of the green bond market by issuing the first ever inflation linked green bond and therefor meeting investor demand at a time when the need to protect investments from higher inflation is at the top of asset managers agenda.”