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Britain's government plans to issue at least 15 billion pounds
($20.6 billion) of new debt this financial year which is
specifically designed to capitalise on investor demand for bonds
whose proceeds are ring-fenced for environmental investments.
"In response to questions from market participants, the Bank of
England confirms that green gilts will have equivalent
eligibility to existing gilts in its market operations," it said
in a statement.
Green bonds will also be able to be used by banks as collateral
in other BoE operations.
The BoE aims to raise its main holding of British government
bonds to 875 billion pounds by the end of this year, and is
currently buying debt at a rate of 3.4 billion pounds a week.
The BoE buys conventional gilts with a remaining maturity of at
least three years, but does not buy inflation-linked gilts which
make up almost a quarter of total issuance.
Britain has lagged behind some other major issuers in launching
green government bonds, in part because of doubts about whether
they were a cost-effective way to raise money.
However, last year Germany launched green bonds which offered a
lower interest rate than standard debt, reflecting a jump in
investor demand for these assets to hold as part of portfolios
that can be marketed as environmentally friendly.
($1 = 0.7283 pounds)
(Reporting by David Milliken; Editing by Kate Holton and Paul
Sandle)
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