The World Bank last week issued its first 'Kangaroo' Green Bond (yes, that is really is the financial markets term!): AUD300m ($280m), 5yrs, AAA. This is the first AUD benchmark green bond. Proceeds are used to fund climate change related projects. Price was 20 basis points over swaps - the same as other World Bank Kangaroo bonds.
UniSuper, Australia's AUD39.5 billion university employees pension fund, has advertised its role as role as "lead investor". They bought AUD 100 million to allocate to their Socially Responsible (SR) Balanced "option" – making up half its current fixed-income component. They then advertised to their 450,000 members that they could have exposure to the bonds by actively selecting that option. Great approach!
There were 15 investors, including Aberdeen Asset Management, AMP Capital, Australian Ethical Investment Ltd, Colonial First State Global Asset Management, Local Government Super (a foundation buyer of green bonds in the Australian market) and QBE Insurance Group Ltd. All investors have a specific interest in supporting climate projects as part of their investment mandate.
Australian bonds newsletter Kanga news reports widespread excitement about the prospects for green-bonds.
On the back of this cracking open of the market we expect to see a flurry of Australian domestic green bond issuance. We expect at least AUD 1 billion by the end of the year.
Joint-lead managers were RBC Capital Markets and Westpac Institutional Bank.
Investor types:
- Asset managers = 42%
- Superannuation funds = 35%
- Insurance companies = 30%
- Banks = 3%
Geography:
- Australia = 77%
- Japan = 10%
- US = 11%
- Other Asia = 21%
This bond follows two benchmarked sized World Bank green bonds in 2014 so far in EUR and USD. The bond takes the World Bank’s total issuance for 2014 to approximately $1.6 billion.
