Introducing the first ever Aussie green bond
5 May 2014
The first green bonds to be introduced to the Australian domestic market were issued by the World Bank last month. Westpac Institutional Bank partnered with the World Bank as joint lead manager for the transaction.
The bonds - called Kangaroo Green Bonds - allow mainstream investors to support activities such as renewable energy, energy efficiency projects and climate adaptation programs through a liquid, trade-able instrument which meets traditional investment considerations.
Investors benefit from the financial characteristics of the bonds, as well as the knowledge that lending is being directed to development projects which are subject to the World Bank’s selection, due diligence and monitoring processes.
Mark Goddard, Head of Debt Securities, Westpac Institutional Bank, said Westpac is proud to be associated with this product.
"Westpac is pleased to have partnered with the World Bank to bring the first ever green bond to the domestic market,” Mark said.
“The World Bank’s Kangaroo transaction will add significantly to the awareness of this important and growing aspect of international markets in the region. The transaction has expanded the universe of investors in this product and represents a true milestone for the Australian market.
“Our involvement is aligned to our broader sustainability strategy, including our commitment to help find solutions to environmental challenges.”
The bonds were placed with 15 investors, all with a specific interest in supporting climate-smart projects within their investment mandates, alongside their traditional investment considerations such as safety of investment and risk-adjusted returns.
Doris Herrera-Pol, Director and Global Head of Capital Markets at the World Bank said this is a landmark transaction.
“This first green benchmark in the Australian market expands the green bond institutional investor base to Australia,” she said.
“It is a further step in building the green bond market that mobilises private sector financing for climate-smart activities to help finance the transition to a low-carbon economy, while helping countries adapt to the effects of climate change and build resilience.”
While this is the World Bank’s first green bond issue in the Australian market, the World Bank has issued a total of USD 5.6 billion equivalent in green bonds through over 60 transactions in 17 currencies since its inaugural green bond in 2008.
The World Bank’s first green bonds were issued in response to requests from large institutional investors looking for a liquid, plain vanilla product that explicitly supports the financing of climate-related projects. Since then, the World Bank has mobilized USD 5.3 billion equivalent through over 60 green bond transactions in 17 currencies to support the financing of eligible projects in its borrowing member countries around the world.
Examples of the types of projects supported by World Bank green bonds include renewable energy installations, energy efficiency projects, new technologies in waste management and agriculture that reduce greenhouse gas emissions and help finance the transition to a low carbon economy, as well as financing for forest and watershed management, and infrastructure to prevent climate-related flood damage and build climate resilience.
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