Demand for the Government’s sale of green gilts was 10 times oversubscribed as investors snap up climate friendly investments.
The Treasury said on Tuesday that it had sold £10 billion worth of gilts, a way of borrowing from the markets.
But demand was much higher than supply, as investors tried to place orders for £101.4 billion worth of the 12-year gilts.
“Green finance is vital in helping us to tackle the environmental challenges we face, and the launch of our first green bond is a signal that the UK continues to be a world leader in this area,” said Chancellor Rishi Sunak
“This funding will be used to finance vital green government projects across the country, including things like clean transportation, renewable energy and preserving our natural environment.
“In helping us to build back better and greener, it will also help to create jobs as we transition to net zero.”
Money from the gilt programme will fund spending on clean transportation, energy efficiency, renewable energy and more.
Laith Khalaf, head of investment analysis at AJ Bell said: “The new guilt-free gilt has been a huge hit, with institutional investors jostling to get a slice of the action.
“Bonds are already in high demand, thanks to the presence of a price insensitive buyer in the form of the Bank of England, as well as regulations which encourage pension schemes and insurance companies to hold gilts.
“Add in a green tint which can help pension trustees bolster their ESG credentials, and you have a very potent sales mix indeed.”
Later this year the Government will also launch a savings bond for everyday investors to buy though NS&I.
“In theory there should be a good deal of demand for the NS&I bond, given its green credentials and Treasury backing,” Mr Khalaf said.
“However, with cash rates so low, savers will be keen to make sure they’re getting a competitive rate, as well as satisfying their environmental concerns.”