Austria launched its first green bond on Tuesday, according to a lead manager.

The 4 billion-euro ($4.3 billion) bond saw final investor demand of 25 billion euros, a memo from the lead manager seen by Reuters showed, which said Austria would retain 250 million euros of the issuance.

The bond, due to mature on May 23, 2049, will offer investors a spread of 22 basis points over the mid-swap level, down from 25 basis points when the sale started, an earlier memo showed.

European governments have shown strong interest in issuing green bonds, which fund environmentally friendly projects, as investor demand for such assets has surged in recent years. Germany, Britain, Italy, Spain, the European Union and Denmark have issued debut green bonds over the last two years.

In addition to longer-term green bonds, which will fund most of the country's green funding needs, Austria is also the first government to include short-term debt instruments like treasury bills and commercial paper in its green debt programme, its debt management office said in a presentation.

That should attract short-term oriented investors like central banks, money market funds and bank treasuries and help broaden the universe of green assets, it said.

Austria has identified just over 5 billion euros of expenditure to fund through its green bond programme for 2021 and 2022 each, the presentation showed, nearly three quarters of it in the field of clean transportation.

Green bond issuance has slowed this year, though Greece is expected to launch its first issue in the second half.

Austria on Monday hired Barclays, BofA, Deutsche Bank, Goldman Sachs, JPMorgan and UniCredit to manage the sale.

(Reporting by Yoruk Bahceli, Editing by Jason Neely and Mark Potter)