Successful green bond issuance marks new stage in Australian clean energy financing market

28 May 2015

The Clean Energy Finance Corporation (CEFC) congratulated the ANZ Bank’s first green bond issuance, which has proved a resounding success with private sector investors and for which the CEFC provided a cornerstone commitment of up to $75 million.

The ANZ green bond, which has been certified by the Climate Bonds Initiative, will support investments in utility scale wind and solar, as well as green buildings, was fully subscribed by private sector investors.

CEFC CEO Oliver Yates said that while CEFC participation was not eventually required for this issuance, the Corporation stands ready to provide such cornerstone commitments for future green bond issuances, as part of its role to help expand and deepen the private sector clean energy investor market in Australia.

“Green bonds provide investors with a unique opportunity to invest in renewable energy and energy efficiency through a low-risk, high quality (rated AA-) fixed-income product. At the same time, green bonds support long term investment in important low carbon infrastructure projects which can benefit the broader economy,” Mr Yates said.

Mr Yates said that green bonds were an important means of expanding and diversifying the investor base and flows of funds into clean energy.

“Investors will always look for a strong financial return, and are increasingly seeking additional benefits such as an environmental or social return,” Mr Yates said.

“Australian institutional investors are looking for ways to invest in clean energy but need more mechanisms for doing so, such as that provided by the ANZ green bond. To date, there have been limited opportunities in the Australian green bond market, showing the potential for growth in this kind of investment for the future.

“In particular, this green bond achieved certification under the Climate Bonds Initiative’s Energy Efficiency – Commercial Property Standard. This Standard includes a range of buildings and green property investments, offering investors a large potential pool of certified investment products, while ensuring robust internationally recognised climate credentials.”

According to the Climate Bonds Initiative, green bonds are increasingly being issued globally by a range of governments and multi-national banks and corporations in response to investor demand for opportunities targeting clean technology and renewable energy. Investors have embraced green bonds, with the market growing from US$11bn in 2013 to an expected US$100 billion in new bonds to be issued in 2015.

The global market for bonds linked to climate change solutions is backing investment across a range of important economic sectors, including building, industrial, agricultural, waste and water.

Mr Yates said superannuation funds and other institutional investors are increasingly recognising that reducing the greenhouse gas emissions exposures in their portfolios is a strategic investment priority.

“Green bonds can help institutional investors invest in areas viewed as increasingly important to their clients, but which have the same credit risk and returns profile as standard bonds. Green bonds also allow investors to balance their risk across a large number of projects, and maintain greater liquidity than that offered by direct infrastructure investments,” he said.