FlexiGroup has issued a climate bond of A$50 million ($38 million; €35 million) on Australia's domestic market, with an underlying asset base of residential rooftop solar.
The bond is backed by consumer receivables originated through FlexiGroup’s wholly owned subsidiary Certegy Ezi-Pay, which has financed more than 120,000 solar PV rooftop installations to date.
This is the second climate bond issuance by the Australian financial group in a year, following a debut bond tranche in April 2016. It is also the second climate-certified issue of a bond backed by securitised assets in the country.
The Clean Energy Finance Corporation, Australia's government-run renewables financier, committed A$20 million to each of the two tranches issued by FlexiGroup as a cornerstone investor. The CEFC is mandated to invest with co-financiers to develop new sources of capital for the nation's clean energy sector.
The institution also noted that the bond has attracted “strong investor participation, signalling growing investor appetite for clean energy assets”.
“FlexiGroup achieved tighter pricing on this climate bond, which shows investors were prepared to pay a ‘green premium’. This is a strong market signal which will assist in accelerating the development of a more varied and flexible green bond market in Australia,” said Richard Lovell, who leads CEFC’s debt markets division. The FlexiGroup offering was priced at a yield 0.03 percent lower than a similar uncertified note.
Earlier this month, National Australia Bank issued an €500 million offshore green bond, said to be “well oversubscribed”, to refinance renewable energy and low-carbon transport projects in Australia.
The Climate Bonds Initiative estimates that the issuance of green bonds rose to $81 billion globally in 2016, compared to $1.2 billion five years ago. The 2016 volume alone accounted for 45 percent of total green bonds issued in the past decade.