Today, Australia and New Zealand Bank (ANZ), Australia’s third largest bank, closed their A$600m ($464m) inaugural green bond deal – and the largest Certified Climate Bond to date. The 5-year bond has a semi-annual coupon of 3.25% and is rated Aa2e/AA-. ANZ was underwriter of the bond.
The ANZ bond claims a lot of records: apart from being the biggest certified so far under the Climate Bonds Standard, it’s the largest green bond from an Australian issuer and the biggest issued in Aussie dollars, alongside KfW’s highly successful A$600m green bond last March. What a list!
Investor demand was strong - the bond was 125% oversubscribed, with the order book closing at a$725m. They also achieved sought after investor diversification, as new investors that had previously not participated in ANZ deals joined the green bond party.
Overall, 46 investors participated in the transaction. Australian investors dominated, accounting for 92%, with the remainder snapped up by Asia. The split by investor type was asset managers 56%, followed by insurance 21% and middle market 7%. Banks accounted for 6%, central banks 3%, semi government 3%, councils 3% and private banks 1%.
Proceeds of the bond will refinance green property (40%), and wind energy and solar energy loans (60%) in Australia, New Zealand and parts of Asia. Some specific projects being funded by bond proceeds include Miaoli Wind Farm in Taiwan, Collgar Wind Farm in Australia and Brookfield Tower Place, a low-carbon building in Perth. A good example of how issuers can take advantage of the green bond theme to mix a range of assets to get needed bond scale.
The green credentials of the bond have been certified by EY under the Climate Bonds Standard, and EY will also do annual check-ups to ensure that the ANZ bond continues to comply with the Standard. Notably, the bond is the world’s first certified under the new Low Carbon Buildings criteria for the Climate Bonds Standards.
For those of you unfamiliar with the scheme, the Climate Bonds Standard is a Fair Trade-like labelling scheme for bonds designed to make it easy for investors to identify low carbon and climate-resilient investments. Having a bond certified under the Standard means that a Climate Bonds approved verifier – in this case EY - certify that the use of proceeds of the bond complies with a set list of criteria, developed by scientists and industry experts.
Nicely done, ANZ! Great example for forthcoming issuers.
And a side-note: ANZ also announced today that they have become a Climate Bonds Partner.
Paul White, Global Head of Debt Syndicate at ANZ Bank said: “We fully support the Climate Bond Initiative’s efforts in developing this important market, we believe a large, liquid and global market will benefit investors, issuers and the environment. We are actively involved in this growth market and we’re pleased to be partnering with them to enhance the market further as we see a tremendous opportunity particularly in the Asia Pacific region”.