NSW issues a sustainable bond backed by Australia’s largest public sector project
A $3.2bn sustainable bond is being released with backing from Australia’s largest public sector project, the Sydney Metro.
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A $3.2bn sustainable bond backed by the new Sydney Metro rail project will bolster the NSW government’s portfolio of green and social bonds.
Opened in August this year, the Sydney Metro is Australia’s largest public sector project.
The NSW Treasury Corporation will include the first tranche of financing for the project in its portfolio of eligible assets for its sustainable bond program.
This will boost its total portfolio of green and social bonds to more than $16.6bn.
The inclusion of the project comes at a time when global institutional investors are looking for more green and social bonds as part of their portfolio.
In an interview with The Australian, TCorp’s general manager, financial markets, Rob Kenna, said the inclusion of the Metro in the bond program provided a new opportunity for investors looking for sustainable investments.
He said the classification of the $3.2bn in new bonds would allow for “better execution” of the fund raising, as it was potentially more attractive for investors. The expanded sustainable bond program means that green and social bonds (collectively called sustainable bonds) will account for some 10 per cent of the NSW government’s outstanding debt.
Mr Kenna said the expansion of the government’s sustainable bond program would “enhance the state’s ability to access competitive funding and reduce future borrowing costs”.
He said the program, which aligns with the International Capital Markets Association’s green bond principles and the United Nations Sustainable Development Goals, had allowed the state government to diversify its funding.
His comments come after returning from meetings with more than 70 international investors in a recent trip which included the UK, Singapore and the United Arab Emirates.
He said the state government was now in discussions with “probably the most diverse set of investors we have ever been engaged with”, with the inclusion of the UAE as a new port of call for potential investors.
“We are seeing a lot of asset managers including central banks, sovereign wealth funds, and hedge funds now very engaged in the semi-government bond universe,” he said.
The Sydney Metro was assessed as being suitable for inclusion in a sustainable bond program because of its environmental commitments which include using 100 per cent zero emission electricity once fully operational.
Key sustainability features of the Metro include an offset of over 46 per cent of the electricity needs in the first phase of construction, the installation of 825kW of solar panels across stations, the maintenance facility and service buildings, reuse of 100 per cent of the spoil generated during construction, the diversion of 96 per cent of construction and demolition waste from landfill and the installation of an energy and water efficient sea water cooling system at the Barangaroo Station.
TCorp manages some $112bn of assets for the NSW government which is rated Triple A by Moody’s and Fitch and AA+ by Standard & Poor’s.
Originally published as NSW issues a sustainable bond backed by Australia’s largest public sector project
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