Client stories

Italy launches record green sovereign bond

COP26 co-host Italy has sustainability at heart

Fully committed to the European Commission’s framework for achieving climate neutrality by 2050 and the goals set out in the European Green Deal, Italy has set itself three key 2030 targets in its Integrated National Energy and Climate Plan: to cut greenhouse gas (GHG) emissions for all non-Emission Trading Scheme (ETS) sectors by 35% (versus 2005 levels) and reduce primary energy consumption by 43% (versus 2007 levels) while increasing renewable energy sources by 30%. Italy will revise these targets this year to align them with the new plan of the European Commission to reduce GHG emissions by 2030 to at least 55% below 1990 levels.

Since 1 December 2020 Italy has held the Presidency of the G20 nations, leading their 2021 work programme, which is structured around 3Ps: People, Planet and Prosperity. The country is also in the public spotlight this year as a co-host with the UK for the COP26 in Glasgow in November and will be holding the Pre-COP and the Youth4Climate meetings in Milan in September.

After passing its “Green Act” for sustainable development in 2015 and laying out a roadmap to grow sustainable finance a year later, Italy’s Ministry of Economy and Finance (MEF) had been preparing to join other EU countries, such as France, Belgium, Ireland, the Netherlands, Poland and last year’s new entrant Germany, in issuing a green sovereign bond. The European Union is set to become a hub for sovereign sustainable finance: a 30% proportion of the European Commission’s €750 billion “Next Generation EU” recovery budget is earmarked to be financed through green bonds.

Italy’s green bond framework aligned with EU Taxonomy

At the end of February, Italy’s Ministry of Economy and Finance (MEF) announced the publication of its new Green Bond Framework (BTP Green) to enable green sovereign issuances.

Through issuing sovereign green bonds, Italy will finance public expenditure that contributes to achieving one or more of the objectives outlined in the EU Sustainable Finance Taxonomy: climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; transition to a circular economy; pollution prevention and control; and the protection and restoration of biodiversity and ecosystems. The use of proceeds will help Italy also support the United Nations’ Sustainable Development Goals (SDGs).

Eligible categories for expenditure under the green framework include renewable electricity and heat, such as transitioning to a carbon neutral electricity grid, or the production of low carbon hydrogen; energy efficiency, including smart grid investments; transport, supporting the shift to sustainable modes of transport such as EVs and public transport; pollution prevention and control and circular economy, including waste reduction and wastewater management; and protection of the environment and biological diversity.

Investors welcome Italy’s inaugural green bond with record orders

A week after publishing its Green Bond Framework, the MEF launched its debut green sovereign bond, appointing NatWest as a joint lead manager after the NatWest team had also supported the MEF on the launch of this new debt instrument.

Italy’s first green BTP (‘Buoni del Tesoro Poliennali’), maturing in 2045 and with a 1.50% annual coupon, set a new record in both size and demand, raising €8.5billion. Around 530 investors from more than 40 countries placed orders, which resulted in a final order book in excess of €80billion. The deal topped Germany’s €6.5billion ‘Green BUNDS’, issued in September last year, as the largest sovereign green debut transaction.

The green bonds attracted a combination of new and returning investors, in particular ESG investors, who subscribed more than half of the green debt. Domestic investors bought the largest share, 26.3%, closely followed by investors from the UK who took 22.1%, while the other half of the bonds allocation went to mainly European investors.

The Italian Treasury has already announced that it aims to issue several benchmark Green BTPs with different maturities over the next few years.

Italy sending a signal to investors

Caroline Haas, NatWest, commented on the transaction and the green framework: “We’re very pleased to have supported Italy’s MEF with its Green Bonds Framework and its debut green sovereign issuance. Climate is of paramount importance to our business, our customers and the economies we operate in, and we’re proud to have been mandated for this historic transaction.”

Kerr Finlayson, Head of FBG Syndicate, Debt Capital Markets: “From an execution perspective, the fact that Italy was able to set a new record in both size and demand for European sovereign green paper is testament to how well this trade was received by investors. We were confident that Italy would be able to identify new investors and it was great to see a significant number of new and returning names in the book – over 50% of the new issue was placed with GSS investors as well which is a really impressive achievement.”

Giuseppe Schirmo, DCM Italy: “With this transaction Italy has demonstrated leadership in the fight to tackle climate change as the third G7 country to issue such an instrument. Green investors were attracted by Italy’s environmental ambition, reflected in the very strict exclusion policy for the Eligible Green Expenditures, and by the quality of the bonds as demonstrated by Vigeo Eiris’ assessment of ‘Advanced Sustainability Performance’. We’ve supported the Republic of Italy for more than a year in the preparation of this landmark transaction, analysing the country’s climate action strategy and environmental targets, also in the context of the European Green Deal. Sustainability and taking action against climate change is key for us and this transaction fully aligns with our purpose to help corporates, institutions and economies achieve net zero carbon emissions.

MEF Italy, affirmed in the Investor presentation: “With the issuance of the Green BTP we want to communicate on Italy’s policies commitment to tackle climate change and protect the environment, broaden and deepen the investor base to benefit from the growing demand for such instruments and further support the development of sustainable finance including sustainability bonds issued by Italian institutions”


This article has been prepared for information purposes only, does not constitute an analysis of all potentially material issues and is subject to change at any time without prior notice. NatWest Markets does not undertake to update you of such changes.  It is indicative only and is not binding. Other than as indicated, this article has been prepared on the basis of publicly available information believed to be reliable but no representation, warranty, undertaking or assurance of any kind, express or implied, is made as to the adequacy, accuracy, completeness or reasonableness of the information contained in this article, nor does NatWest Markets accept any obligation to any recipient to update or correct any information contained herein. Views expressed herein are not intended to be and should not be viewed as advice or as a personal recommendation. The views expressed herein may not be objective or independent of the interests of the authors or other NatWest Markets trading desks, who may be active participants in the markets, investments or strategies referred to in this article. NatWest Markets will not act and has not acted as your legal, tax, regulatory, accounting or investment adviser; nor does NatWest Markets owe any fiduciary duties to you in connection with this, and/or any related transaction and no reliance may be placed on NatWest Markets for investment advice or recommendations of any sort. You should make your own independent evaluation of the relevance and adequacy of the information contained in this article and any issues that are of concern to you.

This article does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any investment, nor does it constitute an offer to provide any products or services that are capable of acceptance to form a contract. NatWest Markets and each of its respective affiliates accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

NatWest Markets Plc. Incorporated and registered in Scotland No. 90312 with limited liability. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. NatWest Markets N.V. is incorporated with limited liability in the Netherlands, authorised and regulated by De Nederlandsche Bank and the Autoriteit Financiële Markten. It has its seat at Amsterdam, the Netherlands, and is registered in the Commercial Register under number 33002587. Registered Office: Claude Debussylaan 94, Amsterdam, the Netherlands. Branch Reg No. in England BR001029. NatWest Markets Plc is, in certain jurisdictions, an authorised agent of NatWest Markets N.V. and NatWest Markets N.V. is, in certain jurisdictions, an authorised agent of NatWest Markets Plc. NatWest Markets Securities Japan Limited [Kanto Financial Bureau (Kin-sho) No. 202] is authorised and regulated by the Japan Financial Services Agency. Securities business in the United States is conducted through NatWest Markets Securities Inc., a FINRA registered broker-dealer (, a SIPC member ( and a wholly owned indirect subsidiary of NatWest Markets Plc.

Copyright 2021 © NatWest Markets Plc. All rights reserved.

Related client stories

NatWest Markets selects TransFICC for Fixed Income Connectivity

We’re proud to have recently partnered with TransFICC to enhance our technology transformation. By partnering with FinTechs like TransFICC, we’re more able to offer simple and modern technology, that delivers the most efficient infrastructure to our customers.

Sustainable Finance Framework highlights Wheatley’s strong ESG performance

We are delighted to have been able to support Wheatley as the first Scottish Housing Association to launch a Sustainable Finance Framework – a crucial step towards them raising sustainable debt in the capital markets.

Platform Housing Group showcases ESG credentials, with inaugural Sustainability Bond

We're delighted to have acted as Lead Manager and Active Bookrunner on the issuance of Platform Housing Group’s inaugural sustainability bond. The bond proceeds will help fund the development of much-needed new housing in the Midlands.