According to Mark Steinert, chief executive of Stockland, the margin on the 300 million Euro green bond the company issued a few weeks back cost no more than regular funding, other than a small compliance fee with the auditors to make sure it delivers the goods.
- See our article Stockland’s green bond stirs appetite for more
We bumped into Steinert at Sydney’s Bays Precinct International Summit at Eveleigh Technology Park in Redfern on Wednesday. He was one of only a handful of developers attending the general presentations (since the focus was on the concept thinking at this stage), though we hear there were plenty of developers at the day reserved for finance issues on Tuesday – more like 200 we heard).
According to to Steinert the green bonds are based on a seven-year maturation date, and provide debt investors with an annual Euro fixed coupon that is 1.5 per cent above the annual Bank Bill Swap Rate, which Stockland has swapped into Australian dollars at a total cost of BBSW +153 basis points. The Notes trade in Euro pricing and the list price was mid-swaps +82 basis points.
“The cost of debt is no different to a normal bond in Europe but we expect that our commitment to associate the money we raise with sustainable activities will help to maintain our leadership position in Australian business,” Steinert said later.
Certainly the issuance has raised plenty of interest from other developers and investors keen to get some of the action, and the market for these in Australia is likely to increase. There’s a “growing number” of international investors who want both the financial benefits and environmentally sustainable benefits as well, he said.
Cost of compliance is believed to be about $50,000 a year, managed via an audit by KPMG and is not considered particularly onerous. The company claims it already has detailed processes and procedures in place to monitor and report performance against environmental and sustainability targets as part of its annual review, it says.
Steinert says the tenants like it too. He reckons the company passed on more than $4 million in energy cost savings to its commercial property tenants since 2009, not to mention abatement of more than 85,000 tonnes of greenhouse gas emissions in FY14 alone and outperforming on its five-year target to reduce greenhouse gas emissions intensity, achieving 29 per cent lower emissions intensity in commercial property, compared to FY09 levels.