October has been a significant month for the issuance of various forms of climate-friendly financial instruments, with Lendlease, New South Wales Treasury Corporation, Flexigroup and Brighte Capital among the issuers of green bonds and notes.
And HSBC Bank Australia participated in an issue of tradeable units in the world’s first water quality market.
NSW TCorp issued a A$1.3 billion 10-year green bond, offering a yield of 1.11 per cent. TCorp said the issue attracted 68 investors, which bid a total of $4.1 billion.
Following completion of the issue, TCorp’s sustainability bond program has $5.2 billion outstanding. The program was established in 2018, with the aim of using proceeds to finance projects that deliver positive environmental or social outcomes.
The program is aligned with the United Nations Sustainable Development Goals.
Lendlease raised $500 million through its first issue of green bonds, the biggest such issue in the Australian market by a non-financial issuer.
The seven-year bonds will pay a fixed rate of 3.4 per cent. Proceeds will be used to fund the construction of green buildings in Sydney’s Barangaroo district, as well as in London, Singapore and Chicago.
The company has recently announced updated sustainability targets, including “absolute zero carbon” in all its operations (including the supply chain) by 2040.
Finance company Flexigroup raised $250 million with an issue of asset-backed securities that included green notes backed by solar receivables. The notes have been certified by the Climate Bonds Standard Board.
Brighte Capital, a finance provider for solar and home improvements, raised $190 million with an issue green asset-backed securities. It was the company’s debut ABS issue.
Brighte is four years old and claims to be the country’s “fastest growing residential green energy financier”. It offers buy now pay later and loan options.
HSBC Bank Australia became the first private sector buyer of Reef Credits, which are tradeable units that put a value on the work being done to improve the quality of water flowing into the Great Barrier Reef. The Queensland Government was the other buyer of the first issue of units.
The Reef Credit scheme was developed by GreenCollar, which has been operating in environmental markets since 2008 and claims to be the biggest provider of carbon abatement in Australia.
GreenCollar describes the Reef Credit Scheme as “an environmental market that pays landholders for on-farm actions that improve water quality by reducing pollutants entering the Great Barrier reef, without compromising the productivity of the land.
“Reef Credits can then be sold to those seeking to invest in water quality improvements, such as governments, private sector and philanthropists.”
The big four banks are getting behind this activity. NAB was the arranger of Brighte Capital’s ABS issue. Commonwealth Bank was joint lead manager and green adviser for the Lendlease issue and joint lead manager for the NSW TCorp issue.
CBA executive general manager for global markets, Anthony Hermann, said in a statement: “More than ever, investors are seeking to have a good level of exposure to green-related products to support their environmental, social and governance commitments.”