NS&I Green Savings Bond: It’s Worth It

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Only 0.65%?

Yeah. Not surprisingly, this figure is disappointing.

Among the dissenting voices was Martin Lewis, founder of MoneySavingExpert.com. He said: “The Chancellor must really hope that the nation is wearing green pants because the proposed tariff is pants.”

An interest rate of 0.65% is much lower than that of other three-year fixed rate bonds and barely matches the rate offered by many easy-to-access savings accounts, which allow holders to withdraw their funds. money anytime.

Investors can take comfort in the fact that the bond’s issuer, NS&I, is backed by the UK and poses about as low a risk on a bond as you might expect.

Yet the available interest on green bonds is lower than that on government bonds, with three-year government debt now yielding around 0.68%. The prospect of rate hikes in the near future should also weigh on investor enthusiasm.

Clearly, yield alone will not be enough to push investors towards this green bond. It will only appeal to those willing to sacrifice a little return in order to support the government’s green agenda.

How will my money be used?

Green bonds help governments not only finance large-scale infrastructure programs – such as those that facilitate the switch from fossil fuels to renewable energy sources – but also support initiatives that encourage more sustainable agriculture activity. share of consumers: building cleaner transport networks, for example, or facilitating access to renewable heating.

As well as being the first G7 country to offer a green bond to retail investors, the UK is also the first to report the social “co-benefits” of spending funded by green bond issuance. This means that investors will hear about the benefits that go beyond the direct consequences of a more stable climate, such as job creation and access to affordable infrastructure.

It will be interesting to see if this is enough to attract investors or if returns remain a priority.


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