ANZ has knocked the Aussie competition out of the water with its green bond issue revealed this morning (Thursday) to be $600 million, roughly double rival issuances, and satisfying a mainly Australian institutional appetite.
The bond will be a boon for green property with nearly half the proceeds to be used to refinance Green Star rated commercial buildings in Australia and New Zealand and parts of Asia as well as projects in the clean energy sector with geothermal power and fuel-efficient transport sectors earmarked for the future.
Among the portfolio is Brookfield Tower Place in Perth.
The move, flagged by The Fifth Estate on Friday, is further evidence of the exponential appetite for “green” investments fuelled in part by the divestment movement and the “death spiral” of fossil fuels.
• See our article Green bonds: ANZ joins the global rush
ANZ bank’s statement on Thursday said the fiv- year fixed rate bond had a coupon of 3.25 per cent and it was rated Aa2e/AA-.
It was primarily distributed with Australian institutional investors, as well as funds in Asia. ANZ was sole lead arranger for the transaction.
It has been certified by the Climate Bonds Initiative, with Ernst & Young providing assurance on an annual basis until the bond’s maturity.
Chief executive of the CBI Sean Kidney said, “The ANZ bond claims a lot of records: apart from being the biggest certified so far under the Climate Bonds Standard, it’s the largest green bond from an Australian issuer and the biggest issued in Aussie dollars, alongside KfW’s highly successful A$600m green bond last March.”
“Investor demand was strong – the bond was 125 per cent oversubscribed, with the order book closing at $725 million. They also achieved sought after investor diversification, as new investors that had previously not participated in ANZ deals joined the green bond party.”
There were 46 investors in the transaction, with Australian investors making up 92 per cent of the issuance and the remainder from Asia.
Mr Kidney said the investor type split was asset managers 56 per cent, followed by insurance 21 per cent and middle market 7 per cent. Banks accounted for 6 per cent, central banks 3 per cent, semi government 3 per cent, councils 3 per cent and private banks 1 per cent.
“Proceeds of the bond will refinance green property (40 per cent), and wind energy and solar energy loans (60 per cent) in Australia, New Zealand and parts of Asia. Some specific projects being funded by bond proceeds include Miaoli Wind Farm in Taiwan, Collgar Wind Farm in Australia and Brookfield Tower Place, a low-carbon building in Perth.
ANZ’s global head of debt syndicate Paul White said the strong demand for the bond highlighted the growing number of sustainable and ethical mandates within the institutional investment community.
“We expect the green bond market will continue to grow, as issuers look to tap the significant liquidity available.”
Director sustainable finance solutions in ANZ’s global loans business Katharine Tapley said: “The fact that this transaction was possible without direct investment from the Clean Energy Finance Corporation is a positive development for the green bond market in Australia. However, we acknowledge the contribution that the CEFC has made to the development of the market in recent years.”
ANZ group treasurer Rick Moscati said the bond was developed in response to investor demand and the bank’s commitment to “deploy capital for the transition to a low-carbon economy.
“Importantly, the continued development of Australia’s green bond market should enable ANZ to increase funding allocated to green projects in the future.”
Mr Kidney said, “ANZ’s bond provides a demonstration of how to do it right; expect a lot of followers.”
ANZ said it had become a Climate Bonds Partner with the CBI.