News

Western Australian Treasury Corporation reports a more than three-times oversubscribed book for its debut green-bond transaction, following what the issuer describes as an unprecedented positive response to an extensive global roadshow. Scarcity value likely buoyed demand but the state treasury corporation also credits extensive work done to deliver a wide-ranging and credible sustainable-finance framework.

A new report published by BloombergNEF highlights the importance of a supportive policy environment and the need for public and private sector alignment to determining the ambition of Australia’s decarbonisation trajectory. The range of potential outcomes is vast, stretching from Australia barely keeping up with international progress to the country taking a position as a global clean energy powerhouse.

Majority domestic distribution highlighted the book of the first green bond issued by CPPIB Capital – the financing arm of the Canadian Pension Plan Investment Board – off its Kangaroo programme. This level of domestic support is a relative rarity in the high-grade Kangaroo sector, and the issuer credits its extensive investor relations work and demand for green labelled product for the outcome.

A growing number of Australian companies are committed to net zero strategies. But turning climate commitments into delivery is a different story. For Australia to be successful in its sustainability transition in the short amount of time there is to do so, business and climate leaders say a further shift in the business status quo is necessary.

There will be nowhere to hide and no excuses for poor practice as climate risk reporting regulation ramps up in Australia, according to David Parker, chair and chief executive of the Clean Energy Regulator. Neither will simply avoiding making sustainability claims be an option.

Deal sources say AusNet Services’ success in placing a substantial 10-year Australian dollar transaction – with a significant oversubscription and minimal new-issue concession – reflects borrower specifics and momentum in the execution process rather than a widespread positive corporate issuance tone. A large bid from Asia drove the outcome but investors generally remain highly selective.

Australian Postal Corporation priced the domestic market’s first sustainability bond from a corporate credit for more than three years in its own return to capital market issuance, noting a six-month process to prepare the deal. The transaction was the first in a series of deals that made the second half of May more productive for corporate supply in the Australian dollar market.

Issuance by Singaporean banks in the Australian dollar market is already at a record level for a calendar year. The most recent such issuer, OCBC Bank, highlights the strategic importance of its Australian activities and says its links with local investors support its plan to be a regular presence in the market.

The primary focus of sustainable finance has traditionally been climate change mitigation: providing capital to decarbonise the economy and thus, it is hoped, minimise the scale of global heating. But with higher temperatures baked in – and more warming guaranteed to come – swathes of Australia increasingly need financing solutions to respond to climate change that is already here.

Collapsing biodiversity and climate change are intrinsically linked. But climate change alone has been the traditional focus of sustainabile finance. Things are evolving, however, with growing recognition of biodiversity’s importance and the need for capital to take it into account.

At the end of February, BloombergNEF published its first Financing the Transition: Energy Supply Investment and Bank Financing Activity report. It found significant differences between banks in the ratio of funding they are providing to renewable energy relative to their fossil-fuel commitments – including within the Australian big four.

Participants in the New Zealand securitisation market believe the asset class has an increasing role to play in the local credit landscape on the back of growing momentum in recent years. Economic and regulatory challenges are likely to put a ceiling on near-term growth but there is a baseline level of confidence in asset quality and the risk-return equation of structured finance.