New South Wales Treasury Corp, rated Aaa/AAA (Moody’s/S&P), raised a whopping A$1.8bn (US$1.3bn) from its debut Green bond, which is by far the largest Green bond issuance in the Australian dollar market to date.
An order book approaching A$2.6bn enabled joint lead managers ANZ, Bank of America Merrill Lynch and NAB to move well beyond the bond’s indicative A$500m minimum issue size. Asset managers were allocated 70%, bank balance sheets 14%, official institutions 8%, trading desks 5% and hedge funds 3%.
Reflecting Australia’s rapidly expanding army of socially responsible investors, dark green accounts took 13%, light green 41% and standard accounts 46%.
The Responsible Investment Benchmark Report 2018 showed A$866bn was being managed as responsible investments as of December 31 2017, for a 55% share of all professionally managed assets in Australia, a 39% increase from A$622bn in 2016. Core responsible investments include positive screening for sustainability investing, community finance and corporate engagement, and negative screening away from such industries as tobacco, weapons and gambling.
The 3.0% November 15 2028s priced at 98.006 for a yield of 3.235% at the tight end of initial November 2028 ACGB plus 44bp-46bp guidance and 43bp wide of EFP (10-year futures). The bond has been certified under the Climate Bonds Standard by the Climate Bonds Standards Board of the Climate Bonds Initiative with assurance from Ernst & Young.
This is the first transaction off TCorp’s Sustainability Bond Programme under which Green, Social or Sustainability bonds can be issued consistent with ICMA Green bond principles, Social bond principles and Sustainability bond guidelines.
The state government funding arm also seeks to align projects to the United Nation Sustainable Development Goals. New South Wales is the third Australian state to sell Green bonds after Victoria and Queensland.
Treasury Corp of Victoria, also rated Aaa/AAA (Moody’s/S&P), became Australia’s first regional issuer in July 2016 with a A$300m five-year print. Queensland Treasury Corp, rated Aa1/AA+ (Moody’s/S&P), followed in March 2017 with a A$750m seven-year trade.
The QTC seven-year was the previous biggest Green trade in Australia, an amount subsequently matched by the A$750m (US$585m) five-year climate awareness bond issued by the European Investment Bank (Aaa/AAA/AAA) in January this year.
TCorp’s record breaker takes year-to-date Green, Social and Sustainable bonds and ABS sales in Aussie dollars and Australian credit bond sales offshore to A$8.1bn equivalent from 10 credits in the state government, banking, education, SSA and consumer lending sectors. This comfortably surpasses 2017’s old whole-year record of A$4.2bn-equivalent from nine credits, which in turn represented a massive leap from the respective 2014, 2015 and 2016 totals of A$1.0bn, A$1.4bn and A$1.1bn, from three, three and five issuers.
Source Nasdaq