CBA issues first climate bond
(29 March 2017 – Australia) The Commonwealth Bank of Australia (CBA) has completed the successful issuance of its first climate bond, raising A$650 million to fund a range of renewable and low-carbon projects around the country.
Proceeds from the issuance will provide funding to 12 projects, including renewable energy generation through solar, wind and hydro power, energy efficient buildings and low-carbon transport projects.
The CBA Climate Bond is the first direct issuance by Commonwealth Bank of a certified climate bond.
The bond has been certified by the Climate Bonds Initiative (CBI), a not-for-profit organisation which aims to promote large-scale investment to deliver a global low-carbon economy.
Commonwealth Bank managing director of debt markets Simon Ling said sustained investor demand for green bonds and assets would continue to fuel growth in the sector.
“Increasing investor awareness and sophistication will fuel demand for climate bonds, and based on the strong pipeline for renewable and low-carbon projects we expect to see this growth increase in the next five years in the Australian market,” Ling said.
This is the third climate or green bond Commonwealth Bank has issued, following roles as joint lead manager on the first Australian green asset-backed securitisation for FlexiGroup, and as sole arranger and lead manager on the world’s first climate bond from a tertiary institution for Monash University’s A$218 million USPP climate bond.
These three issuances also all received support from the Clean Energy Finance Corporation (CEFC), which with a A$100 million commitment was a “cornerstone investor” in the CBA bond.
CEFC debt markets lead Richard Lovell said: “Clean energy assets are attracting increasing investor support, which is critical for the continued development of the clean energy sector, as it continues to prove its ability to deliver positive returns for investors at the same time as contributing to a reduction in Australia’s overall carbon emissions.”
Climate Bonds Initiative CEO Sean Kidney said: “Active leadership from a major bank like Commonwealth Bank sends a strong signal that green bonds have an increasing role in funding new infrastructure, clean energy and helping nations finance their climate action plans.”
The five-year transaction, offered in fixed and floating rate tranches, provided investors with a return of 92 basis points above the relevant reference rates at the time of pricing.