One of Australia's big four banks has become the first lender in the country to issue fully certified climate bonds.
National Australia Bank (NAB) has become the first bank in Australia to issue climate bonds on the domestic market, with a $150 million offering that includes a $75 million commitment from key investor the Clean Energy Finance Corporation.
NAB said that its offering was the first batch of bank-issued bonds to be certified as complying with the International Climate Bonds Standards devised by the Climate Bonds Initiative.
The bonds are senior unsecured NAB corporate bonds, the proceeds of which will be used to fund a total of 17 of renewable energy undertakings around the country, including wind farms and solar power projects in the ACT, NSW, South Australia, Tasmania, Victoria and Western Australia.
14 of these renewable energy projects are already in operation, while a further three are currently under construction.
Antony Cahill, NAB’s group executive for products and markets, said that the bonds will come as a major boon for Australia’s environmentally minded investors.
“This provides investors the opportunity to invest in a bond with the same features of any senior, unsecured NAB bond – but with the additional benefit of being dedicated to financing climate change solutions,” said Cahill.
“The launch also demonstrates the key role debt markets play in supporting the growth of new markets and financing a low carbon economy, and raises the profile of the green bond asset class in Australia.”
Sean Kidney, CEO of the Climate Bonds Initiative, emphasised the appeal of the bonds as financial products that combine a high level of investment quality with demonstrable benefits for the environment.
“From the investors’ point of view, these are high quality investment grade bonds, fully backed by NAB,”said Kidney. “The only difference is that the proceeds are earmarked for green investment…this is an important development for investors acutely aware of the threat of climate change.”
The NAB offering arrive as a a further sign of the rapid emergence of green bonds as a much-coveted asset class, with burgeoning interest from a broad range of investors, including those with interests in the property sector.
Stockland, Australia’s largest diversified real estate trust, raised 300 million Euros in October with its own green bond offering, while earlier this year Westpac and RBC Capital served as the joint managers for AUD$300 million in green bonds issued by the World Bank.
Analysts expect another landmark green bond launch from one of Australia’s big four banks to follow hot on the heels of NAB’s offering, raising between $200 million and $300 million in fund at some point early next year.
Demand for investments that help mitigate climate change have surged in just the past year, expediting a rapid expansion in the market for green bonds. The green bonds market trebled in size this year to reach $34 billion, and is expected to triple once again to reach $100 billion in 2015.