Australian seeks investors for inaugural green bond: roadshow kicks off in April

Australia is ready to kick start its long awaited sovereign green bond, with a four-week roadshow for the 10-year debt issue due to start mid-April.

Australia is finally ready to kick start its long-awaited sovereign green bond, with a four-week roadshow for the inaugural 10-year debt issue due to start in mid-April, targeting in-person meetings with European, Asian and local investors.

The investor roadshow will run until the second week of May with two weeks of in-person meetings and briefings in targeted locations followed by virtual meetings for those in North America, the Australian Office of Financial Management said.

The country’s first sovereign green bond will mature in June 2034 and will finance emission-reducing projects and environmentally-friendly initiatives that support the government’s 2050 net zero commitment.

The four-week roadshow will include in-person and virtual meetings with investors and run from Thursday 11 April to Friday 10 May 2024. The in-person meetings will take place in Sydney, Melbourne, Brisbane, London, Singapore, Japan and other cities in Europe. Virtual briefings will then follow for investors based in North America and other locations from Monday April 29.

The government’s borrowing arm plans to issue the bond — the size of which is expected at billions of dollars but has not been specified — “a short time” after the roadshow, it said.

Australia’s sovereign green bond program is well behind many developed and developing nations, including the UK, Germany, and India. Even some Australian state governments have been issuing green bonds for years.

The Albanese government plans to reduce emissions 43 per cent by 2030. It also plans to have zero-emission sources generate more than 80 per cent of the country’s power by the end of the decade.

The green bonds will finance eligible projects targeting climate change mitigation and adaptation, as well as environmental protection, such as waste reduction, water recovery, the circular economy, and marine conservation initiatives.

Nuclear energy, which Coalition leader Peter Dutton is campaigning for, is explicitly excluded from the eligibility criteria. Fossil fuel projects and those in the arms and ammunition manufacturing sectors and gambling are also excluded.

Exchange traded green bonds — which will be listed and tradeable on the Australian Securities Exchange — are expected to be available next year, the AOFM said.

The issue and the roadshow will be jointly managed by Commonwealth Bank, Deutsche Bank, National Australia Bank, UBS and Westpac.

Investors in Australia’s green bonds will obtain “impact reporting” statements detailing the allocation of proceeds towards eligible green projects and the environmental impact of those projects.

The government released its Green Bond Framework late last year, outlining how it will conduct the program, how it will select the projects they will finance, as well as the reporting requirements.

A team from different government departments will help Treasury pick projects to be financed by the bonds. The Treasury will then update a list every year showing what kind of environmentally friendly things the money can be spent on.

The sovereign bond program is one in a range of moves by the government to turbo charge Australia’s transition into a lower-emission economy. It is also funding the development of a sustainability finance taxonomy to define what types of assets and activities can be correctly called “green”.

Clearer standards and the introduction of a sovereign green bond program will help improve Australia’s green finance credentials. It is also expected to unlock greater investment from superannuation funds, banks, and overseas sources to fund the country’s transition.