NAB Certified Climate bond closes in 5hrs & doubles in size due to huge investor demand! A$300m (US$251m), 7r, 4%, AA-/Aa2. Proceeds to wind and solar projects.

The National Australia Bank (NAB), one of the four big banks in Australia, has closed Australia’s first climate bond certified under the Climate Bonds Standard. The A$300m bond has tenor of 7 years, coupon of 4% and is rated AA- (S&P) / Aa2 (Moody’s).

Strong investor demand led to the bond doubling from the minimum deal size of A$150 we initially reported to A$300m within 5 hours! As the first domestic issuer in A$ NAB targeted Australian investors.  And it worked; the bond received strong demand from domestic accounts including SRI investors. Clean Energy Finance Corporation (CEFC), Australia’s green bank, publicly committed A$75m to the bond. According to CEO Oliver Yates, CEFC believe there is real “potential in the Australian market for mobilising capital in renewable energy through green bonds”. Fantastic – we completely agree! CEFC are long-term supporters of climate bonds and a member of our Technical Working Group for Green Property.

The bond comes hot on the heels of Australia’s first green bond from Stockland in November. It is the second green bond from an Australian issuer and the second AUD denominated bond after the World Bank’s A$300m green bond. But it does win the race to be the first Australian certified climate bond!

So, how does a climate bond differ from a green bond? Certified climate bonds are the same as green bonds but have the advantage of stamp of approval of the bond’s climate change credentials. This helps investors identify quality climate investments. Investors in NAB’s green bond could take comfort in the second opinion from DNV-GL because it verified the environmental credentials against a recognised independent standard. This enables investors that often have a short window of time to participate in a deal to right away judge the green credentials of the bond, reducing their due diligence effort.                                     

To transition to a low carbon economy we need clean energy solutions. NAB’s bond is funding renewable energy projects – exactly what we need. Proceeds from the bond will be earmarked for 17 wind and solar projects; 14 of these are operational and 3 are under construction. The assets will total an aggregate installed capacity of 1.5 gigawatts of electricity across Victoria, South Australia, Tasmania, Western Australia, NSW and the ACT.

Brilliant to see another certified climate bond in the market; bonza!

Disclosure: NAB were, three years ago, one of the early funders of the Climate Bond Standards work. We are thrilled to see they’ve now come to market.