UK sells green gilt amid tumult in government bond markets

LONDON, March 10 (Reuters) - Britain sold ​6.25 ⁠billion pounds ($8.41 billion) of a ​green government bond on Tuesday that took place against the ​backdrop ‌of upheaval in financial markets triggered by the conflict in ⁠the Middle East.

Investor demand for ⁠the 4.625% March ​2037 gilt was strong with bookrunners saying more than 80 billion pounds worth of orders were made - although it ​sold ‌at a significant premium over bonds of similar maturity.

The Debt Management Office said the 4.625% March 2037 gilt was priced to yield 10.75 basis ​points more than the 4.25% 2036 conventional gilt, at ‌the tight end of initial price guidance.

Gilt prices rose in financial markets on ‌Tuesday, recovering some of their heavy losses in recent days on worries about higher inflation linked to the U.S.-Israeli ​war on Iran.

Britain started selling green bonds in 2021 ‌to tap into investor demand for financing government environmental projects such as clean energy. Tuesday's sale was the single ⁠biggest ⁠of a green gilt since the ‌launch.

It was also the first sale via syndication for a ​green gilt since ​September 2022, when the wider ‌gilt market was in turmoil following former Prime Minister Liz Truss's announcement of her economic agenda. ($1 = 0.7432 pounds) (Reporting by Andy Bruce Editing by William Schomberg)