Impact Investing Australia’s partner National Australia Bank has launched a ground-breaking climate bond to raise a minimum of $150 million for renewable energy. Within hours of being issued, the bond doubled in size due to strong demand from Australian investors.
This is the first time an Australian issuer has brought a ‘green bond’ to the local market. Proceeds from the climate bond have been ring fenced to finance both wind and solar projects in Victoria, South Australia, Tasmania, Western Australia, New South Wales and the ACT.
The bulk of the 17 projects are already operational, while three are still under construction. The assets are expected to have an installed capacity of over 1.5GW of electricity – enough generated power for around 730,000 average Australian households for one year.
As reported in The Australian Financial Review, NAB has raised $300 million over a seven-year term from local institutional investors at a fixed interest rate of 4 per cent. The government’s Clean Energy Finance Corporation (CEFC) is a cornerstone investor in the bond, pledging to take up to $75 million.
The NAB Climate Bond is the first bank-issued bond to be certified in compliance with the international Climate Bonds Standards.
Certified climate bonds are the same as green bonds but have a stamp of approval of the bond’s climate change credentials helping investors to identify investments that specifically finance climate change solutions.
“NAB believes that impact investing plays an integral role in building a strong economy and intends to be the leading financial institution delivering impact investment opportunities for current and prospective customers.”
In April, the World Bank priced a AUS$300 million 5-year fixed rate Kangaroo green bond, the first of its kind in the Australian domestic market. World Bank Green Bonds support lending to eligible development programs designed to address climate change.