Austria has joined the green bond market, making a €4 billion debt sale on Tuesday.

Due to mature on 23rd May 2049, the green bond is priced for a yield of 1.876% and the country’s Treasury retained €250 million of the issuance.

The bond attracted €25 billion of investor demand, according to a Reuters news agency report.

Governments in Europe have revealed strong interest in green bond issuance, funding environmentally friendly projects, as investor demand has soared over the past few years.

The bond is priced with a so-called “greenium” – marginally lower yield green bonds offer versus conventional debt as a result of robust demand – of 2.5 basis points, according to the managing director at Austria's Treasury, Markus Stix.

"Due to this greenium, the achieved yield was even below the (Austrian bond) maturing in October 2040, despite today’s maturity being nine years longer," he stated.

The Treasury said ahead of the bond issuance that as well as longer-term green bonds, Austria is the first government to include commercial paper and treasury bills within its green debt programme.

This should attract short-term orientated investors such as central banks, bank treasuries and money market funds, the Treasury added.

Following Tuesday’s green bond issuance, Austria is planning to raise a further €1 billion in 2022 from issuing short-term green debt, according to Austrian Treasury official, Christian Schreckeis.

Over €5 billion of expenditure to fund via the green bond programme for 2021 and 2022 has been identified, with almost three quarters of it in clean transportation.

Although green bond issuance has had a slowdown so far this year, activity is rallying. Countries including the UK, Germany and the Netherlands are planning to top up their existing bonds.