Australia Issues Inaugural Green Treasury Bond at $4.66 Billion

In a major milestone for Australia’s sustainable finance market, the government has issued its inaugural billion green treasury bond at $4.66 billion, working with the Australian Office of Financial Management (AOFM).

The 10-year bond will mature in June 2034 and investors came in from Australia, Asia, Europe and North America. The green bond will help Australia to achieve net zero emissions by 2050.

The bond was priced at a yield to maturity of 4.295%. The bond attracted strong demand from investors with a final order book of $15.24 billion, more than three times the $4.66 billion transaction size.

The bond issue was well supported by both domestic and offshore investors with around 35% allocated to offshore investors. As many as 105 institutional investors were allocated bonds, of which 15 were new to AOFM syndicated deals.

“The demand for the bond confirmed Australia is a go‑to destination for international green capital. This is why encouraging and facilitating more private sector investment into the move to net zero is such a key part of the Australian Government’s Future Made in Australia plan and last month’s Budget,” Australian Ministers Chris Bowen and Tanya Plibersek said.

The Ministers said that the money raised from the green bond will go towards projects like green hydrogen hubs, community batteries and clean transport, that will make Australia an indispensable part of the global economy, as well as programs to conserve biodiversity, bring new jobs to communities all around the country, among others.

The projects supported by the bond will deliver significant environmental benefits, including lowering greenhouse gas emissions, increasing Australia’s renewable energy production and bolstering our biodiversity conservation, restoration and adaptation.

The global energy transformation represents a golden opportunity for Australia and this bond is pulling more global and domestic green capital into financing that opportunity.

Commonwealth Bank of Australia, Deutsche Bank, National Australia Bank Limited, UBS AG, Australia Branch, and Westpac Banking Corporation were the Joint Lead Managers (JLMs) for the issue.

Roadshows

Earlier in May, the AOFM undertook a roadshow ahead of the first issue of the Green Treasury Bond. The roadshow ran from Thursday 11 April to Friday 10 May 2024. The roadshow included in-person and virtual meetings with investors, and presentations to groups of investors. Meetings were arranged by the JLMs for the Green Treasury Bond issue.

The four-week roadshow was held in Australia, the UK, Europe, and Asia while meetings with investors based in North America and other locations were held virtually.

The Green Bond Framework sets out the Australian Government’s key climate change and environmental priorities and outlines how green bonds finance Eligible Green Expenditures. This includes the basis for identifying, selecting, managing, and reporting on expenditures financed with green bonds.

The Framework is aligned to the International Capital Market Association (ICMA) Green Bond Principles 2021.

Sustainalytics, an independent sustainability expert, has provided a second-party opinion on the Framework’s environmental credentials and confirmed that it was credible and impactful and aligns with the four core components of the Green Bond Principles 2021.