The Australian Office of Financial Management (AOFM) has announced the Treasury’s debut green bond, which saw an issue size of $7 billion in face value terms.
The oversubscribed debut saw bids total $22.89 billion at the final clearing price. It is expected to settle on Friday, 14 June 2024. The green bond, maturing in June 2034, will pay a coupon of 4.25 per cent.
Initial price guidance for the issue is a spread of -5 to -1 basis points to the implied bid yield for the primary 10-year Treasury bond futures contract.
Commenting on the launch, Treasurer Jim Chalmers said: “The government has issued $7 billion of its inaugural green bond, in a major milestone for Australia’s sustainable finance market. 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.
“Money raised from the bond will back projects that will help make Australia an indispensable part of the global economy and bring new jobs to communities all around the country.
“Demand for the bond confirms Australia is a go‑to destination for international green capital.”
As previously announced by the AOFM, Commonwealth Bank of Australia, NAB, Deutsche Bank, UBS AG, Australia Branch, and Westpac serve as joint lead managers for the issue. NAB and UBS AG, Australia Branch acted as joint structuring advisers for the establishment of the program.
The AOFM also indicated an issuance of this bond by tender will be considered after 30 June 2024.
The issuance follows a four-week roadshow in April that saw one-on-one meetings with investors, both in-person and virtual, across two teams travelling Australia (Sydney, Melbourne and Brisbane) and overseas to Singapore, Japan, the UK (London) and Europe (Paris, Frankfurt, Switzerland and Milan).
There are also two weeks set aside for virtual meetings, to be offered to investors in North America and other locations, and to cover investors missed in the in-person meetings.
An interdepartmental Green Bond Committee will endorse the eligible green expenditures to be financed by the bonds, Treasury confirmed, although not all of the government’s spending on programs with climate change and environmental objectives will be financed by these green bonds.
The issuance of the Treasury bonds follows a number of existing green bonds issued by Australian states, such as Victoria in July 2016, and more recently, Western Australia in June 2023.
