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Westpac issues climate bond for Japanese retail investors

26 March 2018

In a first for the major Australian banks, Westpac Group has issued a climate bond to Japanese retail investors, known as the Uridashi bond market, to support the bank’s funding for climate change solutions.

 

“Our strong credit rating and green credentials met the growing appetite amongst Japanese households for environmentally conscious investments,” said Richard Salmon, Westpac’s Director of Balance Sheet Funding, Treasury.

 

Westpac’s first climate bond was issued in May 2016 into the Australian domestic market and Climate Bonds have raised a total of A$1.5 billion across all four issuances to date. 

 

Like most green or climate bonds issued by banks, this climate bond is a ‘use-of-proceeds’ bond, meaning funds are used to finance or re-finance sustainable projects. For this bond, proceeds will fund renewable energy projects, low carbon commercial property and rail transport.

 

“We are a regular issuer in the Uridashi Bond market but this is the first time we have offered a climate bond for Japanese retail investors,” continued Richard.

 

The A$117.3 million, five year climate bond was issued via a quasi-public trade through lead manager SMBC Nikko. It was well supported by Japanese retail investors with volume usually attracting A$50-$75 million for this sort of trade.

 

“This deal is the fourth climate bond we have issued and contributes to the bank’s target to facilitate up to A$3 billion of green bond issuance and arrangement by 2020,” said Richard. 

 

External auditors provide an Independent Reasonable Assurance Report certifying the Westpac Climate Bond program as meeting the criteria of the Climate Bonds Standards of the Climate Bonds Initiative (CBI) allowing CBI to grant certification for this issuance.

 

Helping the transition to a net zero carbon emissions economy

We have had a long running commitment to support climate-conscious customers to help Australia transition to a net zero carbon emissions economy, with a strong track record of lending to renewable energy and energy efficiency projects.

 

The bank’s leading sustainability performance, including climate change strategy, was internationally recognised in September 2017 with Westpac being named as the world’s most sustainable bank for the tenth time in the last 16 years by the Dow Jones Sustainability Index.

 

The world’s first Climate Awareness Bond was issued by the European Investment Bank (EIB) in 2007. The first in the Australian market was a A$300 million five-year issue from the World Bank in April 2014, managed by Westpac. According to the CBI the Green Bond market reached US$156.7 billion issuance in 2017 and is forecast to jump to US$250 billion in 2018.

 

References

Westpac Prices its First Climate Bond
Climate Change Position Statement and 2020 Action Plan - Westpac (PDF 888KB) 
http://www.eib.org/investor_relations/cab/index.htm
World Bank Launches First Kangaroo Green Bond - World Bank Group
https://www.climatebonds.net/