Romania allocates over RON10.85 billion worth of external funding for green projects

Romania has successfully completed the first stage of sustainable funding, borrowing RON10.85 billion, the equivalent of EUR 2.18 billion, in two green bond issues, which is an important step towards drawing capital for projects with a positive impact on the environment, the Ministry of Finance (MF) announced on Friday.The ministry has published the official report on the allocation of funds, the first of its kind published so far, which details the use of the borrowings.Thus, of the total amount raised, RON 9.85 billion (EUR 1.98 billion ) came in February 2024, in Romania's first green Eurobond issue, and RON 1 billion (EUR 201 million) from a Samurai Green issue released last October on the Japanese market, according to a press statement of MF.Through this operation, Romania aligns its funding strategy with the international commitment to combatting climate change and promoting sustainable development, in accordance with the Paris Agreement and the UN provisions on Sustainable Development. The funds have been fully allocated to eligible environmental protection projects, in areas such as clean transport, sustainable water management, adaptation to climate change, protection of natural resources and reduction of pollution."The issuance of green bonds and the government's continuous commitment to the implementation of projects that meet climate challenges demonstrate Romania's potential to be an important player in the field of sustainable finance at regional, European and international level. Through these issues, the Ministry of Finance fulfils, in addition to the objective of diversifying the investor base, an important objective in the management of public debt and funding the transition to a low-emission economy. Thus, we manage to achieve the sustainable development goals committed to when signing the Paris Agreement and supporting projects with a positive impact to improve the quality of life for all," according to Finance Minister Alexandru Nazare.The net amounts from the two issues amounted to RON 10.85 billion (approximately EUR 2.18 billion). Of these funds, 41.5% were used to finance projects in 2021-2023, and the remaining 58.5% for projects in 2024. The amount was allocated for investment in areas such as sustainable transport, water, climate change, natural resources and pollution prevention.The strategic areas in which the funds were invested are sustainable water and wastewater management - RON 4.6 billion; clean transport - RON 1.87 billion; climate change adaptation - RON 2.04 billion; protection of natural resources and sustainable land use - RON 2.33 billion, and pollution prevention and control - RON 52,000.An interministerial committee recently approved the final allocation report, and the external evaluator, Standard & Poor's, confirmed that all expenditures are in line with the commitments made. "The external evaluator appreciates that the Report meets the requirements regarding the reporting of allocations provided for in the Green Bond Principles and the firm commitments within the green bonds regarding the reporting of allocations, and the allocations for environmental projects are in line with the issuer's commitments prior to the implementation of the green bond issues," according to MF.Romania's green bonds have generated interest on international markets. The euro issue was oversubscribed by more than four times (investor demand exceeded more than 4 times the amount Romania wanted to borrow), which shows confidence in Romania's sustainable finance instruments. The market performance was recognised by two important distinctions: the "Top Deal" award offered by CMD Portal for the largest green issue made by a Central and Eastern European country and the "Cross-border Yen Bond of the Year" award, granted by DealWatch for the Samurai bonds launched on the Japanese market.The green bond issues are part of the MF funding strategy and are dedicated to funding priority sectors in the areas of environmental protection and climate change, contributing to the diversification of the investor base.According to MF, the next stage is drawing up an impact report, which will provide details about the environmental and social effects generated by the funded projects. It will create the basis for possible new green bond issues, depending on the eligible projects that will be identified moving forward.