01 Performance GREEN BONDS

CEFC ANNUAL REPORT / 2014–15

GREEN BONDS

The CEFC works collaboratively with co-financiers and project proponents to seek ways to secure financing solutions for the clean energy sector. Climate and other “green” bonds have the potential to be a strong driver of investment in the renewable sector over the next five years. In 2014–15 the CEFC supported two Australian firsts in this area.

Project Scope

The CEFC committed a cornerstone investment of up to $75 million in a NAB Climate Bond issue. This was the first Australian dollar denominated and Australian asset linked bond of its kind. The NAB Climate Bonds are senior unsecured NAB corporate bonds for financing a portfolio of 17 renewable energy projects in operation or under construction in Victoria, South Australia, Tasmania, Western Australia, New South Wales and the Australian Capital Territory. The Corporation’s investment is to finance projects that meet the CEFC’s investment eligibility criteria. The NAB Climate Bond was certified in compliance with the international Climate Bonds Initiative, a global benchmark which assists investors identify investments which contribute to climate change solutions.

The CEFC also committed to provide a cornerstone investment of up to $75 million for ANZ’s first climate bond. The ANZ bond issuance, which was also certified in compliance with the Climate Bonds Initiative, was fully subscribed by private sector investors, meaning CEFC participation was not eventually required. 

ANZ successfully raised $600m for financing a portfolio of loans that directly contribute to developing low carbon industries, technologies and practices. The bond was the largest Australian dollar denominated climate related bond to date by an Australian issuer and was primarily taken up by Australian institutional investors, as well as funds in Asia.

The global green bond market is one of the fastest growing markets in the world, trebling last year after issuing nearly $50 billion. It is tipped to more than double again, with estimates of over $100 billion in green bonds to be issued in 2015 alone. CEFC analysis found that the Australian green bond market doubled in size in the first half of calendar 2015. By the end of 2015, it is tipped to pass $2 billion in cumulative issuances, bringing with it more than 100 institutional investors. The investor appeal of this important new asset class is underscored by the fact that all Australian issuances were fully subscribed immediately after announcement: in fact, demand was so strong that the majority of issuances were healthily over-subscribed.