Green bonds and sustainable investments. Cyprus ranks fourth in the eurozone.

Cyprus ranks fourth in the eurozone in terms of the share of sustainable debt securities in total issuance. Green bonds and bonds financing environmental and social projects reached a combined value of €1.42 billion. They account for 9.5 percent of the market, higher than Germany and Greece.

The high ranking is primarily due to a single government bond issue in 2023, worth €1 billion. It accounts for approximately 70 percent of the total amount. An analysis published by the Central Bank of Cyprus thus highlights both the importance of this financing and the limited involvement of non-banking companies.

What are green bonds?

A bond is a form of loan. The investor provides money to a government, bank, or company, which agrees to repay it under specified terms. The investor also typically receives interest.

Green bonds are used to finance environmental projects. The money can be spent, for example, on renewable energy, modernising buildings to reduce electricity consumption, cleaner transport or water management.

Therefore, this isn't a grant. The issuer borrows money and must repay it, and also specifies the projects for which the funds will be used.

The broader category of sustainable debt securities encompasses several types of instruments. In addition to green bonds, it includes social bonds and those that combine financing for environmental and social goals. A separate group comprises securities linked to the achievement of specific sustainable development goals.

Fourth place is for market share

The data refer to March 2026. France achieved a share of 9.6 percent, just 0.1 percentage point higher than Cyprus. Germany's share was 8.7 percent, and Greece's was 5.8 percent.

The ranking compares the market share of such securities in each country, not the amount of financing obtained. A large economy can therefore issue significantly more sustainable bonds and still have a lower interest rate.

This is also not a ranking of countries' environmental performance. A high share of bonds indicates a financing method, but it does not in itself indicate how much energy a country produces from renewable sources or how effectively it reduces emissions.

One billion euros from a single state issue

The largest contributor to the result was the sustainability bond issued in 2023 by the Public Debt Management Office. Its value was €1 billion.

The remaining approximately €422 million is accounted for by green bonds, issued almost exclusively by banks. The share of private non-financial companies remains small.

This is an important distinction. Governments and banks already use this method of raising funds, but the market has not yet broadly expanded to other sectors. The high position in the ranking is based primarily on large government issuances, not on numerous projects financed by companies.

Which bonds are still missing?

As of March 2026, Cypriot issuers have not launched social bonds or bonds linked to the Sustainable Development Goals.

In the latter category, financial terms may depend on the achievement of pre-determined benchmarks, such as emissions reductions. This is a different mechanism than allocating green bond funds to a specific investment.

The analysis highlights these areas as opportunities for further market development. A larger number of issuers would also reduce the country's dependence on a single government bond.

Financing is just the beginning

Green bonds can help raise money for capital-intensive investments. However, transparency is also crucial: investors should know what the funds were used for and what results the funded projects have achieved.

Fourth place demonstrates that sustainable debt securities already have a significant share in the domestic market. The next test will be the development of issuance outside the state and banks, and the use of this financing for specific environmental and social projects.

Sources: Central Bank of Cyprus, Philenews, Council of the European Union