Victoria issues first green bonds

Proceeds from the $224m transaction, backed by 17 investors, will be used to finance clean energy and transport projects in the Australian state.

The Treasury of Victoria has issued Australia's first state or federal government bonds with international Climate Bond Certification, raising A$300 million ($224 million; €203 million) to finance environmental projects in the state. 

The triple-A rated bond, launched on Monday, was fully subscribed in a little more than 24 hours, according to a statement. The bond has a tenor of five years with a yield of 1.79 percent.   

The total book order of A$300 million was supported by 17 investors comprising insurance companies, funds managers and investors with a specific green or socially responsible investment mandate. 

The transaction's proceeds will go towards financing and refinancing state investments in energy efficiency, renewable energy, low-carbon public transport and water treatment schemes. Projects include LED traffic lights, mini-hydroelectric power stations, low-carbon buildings, the Melbourne Metro Tunnel, the Mernda Rail extension and the development of a large-scale renewable energy power station, according to the statement. 

The London-based Climate Bonds Initiative certified the bond under its Climate Bond Standard & Certification Scheme, which aims to ensure that the proceeds are used in ways that help boost the low-carbon economy. 

“It’s evident by the strong market demand for these bonds, that they make economic sense – giving investors the confidence of a triple-A rated government security, with the assurance that funds will be used for ethical and environmentally friendly investments,” said Victoria Treasurer Tim Pallas.