By Emese Bartha

Denmark will launch its debut green bond at an auction on Jan. 19, applying the "twin bond" concept used by the German Finance Agency, the Danish central bank said Wednesday.

The new green bond will have a 0% coupon and maturity in November 2031, thus the coupon and the maturity of the green bond will match those of a conventional on-the-run government bond.

The expected issuance volume of the green bond will be announced in connection with the release of the central government's borrowing strategy later in December, the central bank said. It added that the issuance volume of green bonds is determined on the basis of the amount of eligible green expenditures, which constitutes an upper limit, while taking the overall borrowing strategy into account.

"There is an increasing focus on sustainability and the green transition, and this also applies to a growing group of investors in the financial markets," Gov. Signe Krogstrup said. "With a green bond, the Danish government offers a product that is in high demand among investors and that can support a broad and well-diversified investor base," she said.

The twin bond concept supports the liquidity in the green bond, as investors, at any time, will have the opportunity to switch the 10-year green twin bond to the corresponding and more liquid conventional 10-year twin bond one-to-one, the central bank said. However, investors won't be able to switch the conventional twin bond to the corresponding green twin bond, it said.

Write to Emese Bartha at emese.bartha@wsj.com

(END) Dow Jones Newswires

December 08, 2021 03:07 ET (08:07 GMT)