Austria raises €1bn from first green T-bill

19 Oct 2022

Austria generated €1 billion from the sale of the first green T-bill on Tuesday, an initiative targeted at short-term investors buying environmentally-friendly assets.

Maturing on 23rd February next year, the bill is priced for a 1.25% yield. With demand relative to the amount on offer, the bid-to-cover ratio, was 2.69 times, Reuters reports.

Up to now, most governments and businesses selling green debt have sold bonds. Yet now, as the asset management industry seeks to boost its sustainability, shorter-term green debt demand is mounting.

AA rated Austria is the first government to issue a green T-bill, which typically matures in under a year.

According to Austrian Treasury director, Markus Stix, short-term green securities are the "missing link" in the green debt market.

"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," Stix told Reuters news agency.

"The short-term green securities will attract, for example, central banks, money market funds or bank treasuries, which are very active at the short end of the curve but at the same time want to include ESG aspects," he went on to say.

This issuance of short-term green debt is part of a wider green issuance programme that got underway in May with the sale of a 27-year green bond.
Austria plans to fund 20% of the initiative through short-term instruments. "Our new green treasury bills and green commercial papers, these are planned from next year onwards, enable (short-term investors) to enlarge their investment universe," Stix added.

The country’s stance of issuing short-term green paper along with longer-term bonds is in contrast to the majority of governments, which focus on bonds with more than a 10-year maturity.

"Green projects take quite a long time, so they don't usually lend themselves to short-term lending," said Mizuho rates strategist, Peter McCallum.
Stix added that the Austrian Treasury is planning to regularly roll over green T-bills and commercial paper.