Natixis-parent BPCE sells first European defence bond

By Yoruk Bahceli

LONDON (Reuters) -BPCE, parent to French investment bank Natixis, sold Europe's first bond focused on defence spending on Thursday, as the region steps up financing efforts to boost military spending.

The five-year bond will raise 750 million euros ($878 million), Refinitiv capital markets news service IFR reported, having secured 2.8 billion euros of investor demand.

The funds will be used to finance or refinance lending linked to defence and security equipment and technologies.

It is the first bond to be sold in line with exchange operator Euronext's European Defence Bond initiative.

Euronext will prioritise listing applications for bonds carrying the label, it said in July.

European states have pledged to ramp up defence spending this year which has boosted investor appetite for the sector, prompting a surge in defence stocks.

The labelled bond structure is similar to green bonds, which are used to fund environmentally beneficial projects.

Obtaining the label from Euronext does not require any independent evaluation. BPCE will, however, have its use of the proceeds reviewed by an independent external reviewer and publish an annual report on how it allocates the cash, it said in an investor presentation.

The bond will be priced for a yield of 3.167%, IFR reported.

($1 = 0.8542 euros)

(Reporting by Yoruk Bahceli; editing by Dhara Ranasinghe and Elaine Hardcastle)