The Commonwealth Bank of Australia has raised $650 million for its first climate bond, which will fund renewable and low-carbon projects in Australia.
Proceeds from the issuance will fund 12 eligible Australian projects, including solar, wind and hydro power projects, energy efficient buildings, and green transport projects.
The CBA Climate 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.
It is backed by more than $1 billion of domestic renewable and low-carbon projects that meet the Climate Bonds Initiative’s (CBI) Climate Bond Standards, and will be reviewed annually by Ernst & Young (EY) until the bond matures in February 2022.
Commonwealth Bank managing director debt markets, Simon Ling, commented: “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.
“We are committed to leveraging our expertise and scale to support the growth of climate bonds, directly and for our clients,” Mr Ling said.
The five-year transaction, offered in both fixed and floating rate tranches, provided investors with a return of 92 basis points above the relevant reference rates at the time of pricing. Commonwealth Bank acted as sole lead arranger for the transaction.
Climate Bonds Initiative chief executive officer Sean Kidney said: “The Commonwealth Bank climate bond marks a significant step for green finance globally, as institutional investors and pension funds will take note of one of the world’s largest banks entering the climate bond market with a best practice example of market standards and issuance.
“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 CBA Climate Bond is the first direct issuance by CBA of a certified climate bond, and the third climate or green bond Commonwealth Bank has issued, following roles as joint lead manager on the first Australian green Asset-Backed Securitisation (ABS) for FlexiGroup, and as sole arranger and lead manager on the world’s first climate bond from a tertiary institution for Monash University’s $218m USPP climate bond. These three issuances also all received support from the Clean Energy Finance Corporation (CEFC).
The release of CBA’s Climate Bond comes in the same month as NAB’s issuance of a public offshore green bond, the first of its kind released by an Australian bank and said to be the largest green bond from an Australian issuer.
NAB’s €500 million ($691 million) bond will refinance investments in green technologies in the UK, Europe, Australia and the Americas, such as energy efficiency, green transport, renewable energy, low carbon and water efficiency projects.