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Bond buyers give Britain some green advertising

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A farmer holds a bundle of paddy seeds at a rice field in Cianjur, West Java province June 12, 2014.

LONDON, Sept 21 (Reuters Breakingviews) - The UK is burnishing its help for the planet ahead of the upcoming COP26 climate summit in Glasgow. The day after Prime Minister Boris Johnson pressed leaders to deliver on their commitments for a global climate fund read more , investors placed orders worth 100 billion pounds for the country’s inaugural 10 billion pound green bond.

Green bonds help borrowers fund investments in wind farms and the like. Yet issuing such a security does not make a country any more virtuous than if it funded those projects with ordinary debt. Still, investors love them. Britain priced the bonds, which mature in 2033, at a yield of 0.87%. That’s up to 3 basis points lower than the return on equivalent conventional gilts, IFR reckons . A saving of perhaps 3 million pounds a year helps cover the cost of setting up and running a green bond programme. Yet everybody is jumping on board: the European Union could issue 250 billion euros of the securities in coming years. As the market grows, the “greenium” may shrink. (By Neil Unmack)

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Editing by Peter Thal Larsen and Karen Kwok

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