Australia's Westpac Banking Corporation has issued its first climate bond, raising A$500 million ($361 million; €323 million) to help finance a A$1 billion clean energy portfolio.
Funds from the Westpac Climate Bond will be invested in seven wind energy facilities and five low-carbon commercial properties. The wind projects have a combined capacity of about 800MW.
Siobhan Toohill, Westpac's group head of sustainability, noted in a statement that the global market for climate bonds had expanded “exponentially” in recent years.
“The strong response to the Westpac Climate Bond today reflects the continuing growth we're seeing in investors' and customers' appetite for products that have a positive impact on the economy and the environment,” she said.
The bond issuance adds to Westpac's commitment to provide financing of up to A$6 billion for the cleantech and environmental services sector by 2017. The bank surpassed the commitment two years ahead of schedule, with lending and investment to the sector totalling A$6.3 billion as of 31 March 2016, according to the statement.
The Westpac Climate Bond, the first green bond directly issued by Westpac and certified by the Climate Bonds Initiative, is the second green bond brought by the lender to the Australian Market. In April 2014, Westpac teamed with the World Bank to issue the first Kangaroo Green Bond, raising A$300 million.
The Clean Energy Finance Corporation , a renewables financier created by the Australian government, has committed A$90 million as a cornerstone investor in Westpac's green bond issuance.
CEFC's commitment aims to catalyse investment in climate bonds and create momentum behind the green investment class within Australia's capital markets, said Oliver Yates, chief executive of CEFC, in a statement.
CEFC was also a cornerstone investor in the inaugural climate bond issued by National Australia Bank in December 2014, with a commitment of A$75 million. The NAB green bond was reportedly subscribed at A$300 million, beating its original A$150 million target.
CEFC recently invested in FlexiGroup's certified green bond, a security linked to renewable energy assets. “We see growing the domestic climate bond market as a way to unlock new investment in the clean energy sector,” said Yates.
Total global green bond issuance worldwide rose from about $11 billion in 2013 to $41 billion in 2015. At the Paris climate talks, investors welcomed the growth of the climate bonds market as a mechanism to finance climate change solutions while meeting fixed income yield and risk requirement.