The Commonwealth Bank of Australia has issued its first climate bond, raising A$650 million ($497 million; €463 million) to fund domestic renewable and low-carbon projects worth more than A$1 billion.
CommBank said proceeds from the issuance will fund 12 Australian schemes, including solar, wind and hydro power plants, energy efficient buildings and low-carbon transport projects.
The CommBank climate bond, which will mature in February 2022, was offered in both fixed and floating rate tranches with a return of 92 basis points above the relevant reference rates at the time of pricing, the bank said.
“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 the growth increase in the next five years in the Australian market,” said Simon Ling, managing director of debt markets at CommBank. He added that the bank had seen robust appetite from local and international investors.
The Clean Energy Finance Corporation, Australia's government-run renewables financier, acted as a cornerstone investor in the CommBank climate bond with a A$100 million commitment.
Having served in such a role for five out of 11 Australian climate bond issuances to date, the CEFC has so far invested some A$325 million into the green bond market. The latter has now grown to more than A$4 billion and enlisted support from than 100 institutional investors, the institution said.
“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,” commented Sean Kidney, chief executive of the Climate Bonds Initiative.
In addition to small and large-scale renewable energy plants, the CEFC pointed out that the Australian climate bond market is financing other types of clean energy projects, from LED traffic lights to mini-hydro power stations, low-carbon buildings, new trains and rail infrastructure.
CommBank is the last of Australia's four largest lenders to issue direct green bonds.
In December 2014, National Australia Bank issued its first onshore offering of A$300 million to finance domestic projects, followed by another €500 million offshore green bond issuance earmarked for projects across the world this February.
Australia and New Zealand Banking Group launched its first green bond of A$600 million in May 2015 and Westpac offered A$500 million of bonds in May 2016 to finance a portfolio of clean energy projects, including low-carbon commercial buildings.