Canada gathered orders for more than double the size of its inaugural green bond Tuesday, allowing it to cut the yield initially offered to investors. 

The deal arrangers accumulated orders for more $11 billion (US$8.75 billion) for the $5 billion transaction by the time it priced, according to people with knowledge of the matter. Final demand declined from $12.3 billion after Canada cut the yield to 0.5 basis points over a Canada bond due in June 2029 from about 2.5 basis points offered Monday, said the people.

“It is important first step for the government to develop a liquid green bond program,” said Trevor Bateman, head of credit research at CIBC Asset Management. “It may provide Canada the opportunity to attract new ESG-focused investors that might not have invested historically.”

Canada, the world’s fourth largest oil and fifth largest natural gas producer, priced the first green bond transaction after a week-long marketing effort as governments and investors worldwide digest the geopolitical consequences of a war pursued by Russia, a major energy supplier. 

Canada is excluding activities including transportation, exploration and production of fossil fuels as well as nuclear energy from the potential use proceeds of its green bonds “in recognition of the exclusionary criteria embedded in major green bond indices and green investor and market expectations,” the government said on its website. 

The deal’s order book includes $1.25 billion from joint-lead managers, according to people familiar with the matter. The transaction, which had 98 investors, earned a price advantage -- or greenium -- of 2 basis points compared to a similar conventional security, the people said.

A press officer for Canada’s government didn’t provide immediate comment.