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Three certified Australian green bonds surface in a week

Solar on the roof. Author: Marufish. License: Creative Commons, Attribution-ShareAlike 2.0 Generic.

Feb 21 (Renewables Now) - With three new certified bonds just announced, Australia is cementing its reputation of green bonds best practice. FlexiGroup’s ABS, Queensland’s sub-sovereign, and Westpac’s off-shore placement all gained our attention, the Climate Bonds Initiative (CBI) says in a short overview, parts of which you can see below.

FlexiGroup Greenium on 2nd Certified Solar Securisation  

FlexiGroup has followed up its award winning 2016 Certified ABS for rooftop solar with a second green securitisation. Nasdaq is reporting some keen pricing on the AUD-50-million (USD 38m/EUR 36m) green notes within an AUD-265-million offer that went to market on Tuesday, replicating the ‘greenium’ (green premium) first observed in the 2016 sale.  

On both occasions the Clean Energy Finance Corporation is a cornerstone investor.

The 2016 Flexigroup ABS was a world first certified green ABS Climate Bonds Certified green securitisation and also Australia’s first securitisation to include a green tranche, with AUD 50 million of A2G notes backed by loans for residential rooftop solar power systems.

Sunshine State Sub Sovereign from QTC - Climate Bonds Certified

Queensland’s Treasury Corporation (QTC) has announced pre-issuance Climate Bonds Certification on eligible assets that align with the Climate Bonds Solar and Low Carbon Transport Standards respectively. Pre-issuance certification enables QTC to issue an independently verified green bond to domestic and international investors.

Solar energy, light rail and new bicycle networks are amongst the projects to be funded. QTC has a wide pool of green assets and has signalled its intention to undertake further certified bond issuance.

Queensland is the second Australian sub-sovereign to offer Certified Climate Bonds to the market following Victoria’s ground-breaking issuance in July 2016.

Westpac Sells JPY 5.6 billion of Climate Certified green bonds into Japan

Responsible Investor is reporting a private sale of some JPY 5.6 billion (EUR 46.5m/AUD 64.8m) of Climate Certified green bonds to Japan-based Meiji Yasuda Life Insurance.

In declaring the purchase Meiji advise they have a policy to invest JPY 150 billion in domestic and JPY 250 billion overseas, totalling JPY 400 billion to purchase green bonds and other related ESG bonds.

Westpac has previously issued a whopping AUD-500-million Climate Certified bond in May 2016, the third of Australia’s ‘Big 4’ banks to issue certified bonds.

The Last Word by the CBI

We’ll be following up on these three stories in our next full Market Blog due out before the end of February.

Meantime, it’s worth revisiting a series of points we made when Monash University issued their world leading certified green bond just before Xmas.

Australia has issued a high proportion of Certified Climate Bonds, indicating a strong adherence to international best practice in green bond investment governance. The three announcements from last week reinforce that trend. The list of previous certified issuance, all figures in AUD million, is in the table below:

Issuer Amount Use of proceeds Date
NAB  300 Solar, wind Dec '14
ANZ Bank 650 Low-carbon buildings,
wind, solar
May '15
Flexigroup 50 Solar April '16
Westpac Bank 500 Multisector May '16
Treasury Corp
of Victoria
300 Multisector July '16
Monash University 218 Multisector Dec '16

Australia has also been the source of a slew of green bond firsts despite its relatively small size in the international market.

We hope to see more green issuance in Australia, from the major banks, the commercial property sector, corporates and with the states of Queensland and Victoria having stepped up, possibly other state-based investment bodies. 

To encourage issuers, large pension funds making their voices heard locally and internationally in seeking more labelled green product would be another positive.

With Australia’s financial regulator APRA now advising the nations’ banking, insurance and asset managers that climate change is a material risk, building on the best practice foundations in green finance that have been laid to date would seem a forward looking part of prudent action.

(AUD 1 = USD 0.76/EUR 0.72)

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Sean Kidney is CEO of the Climate Bonds Initiative, an investor-focused NGO working to mobilise debt capital markets for climate solutions. Projects include a green bond definitions and certification scheme, and work with the Chinese Government on how to grow green bonds in China.

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