Sustainable finance update: April 2020

A monthly look at the Australasian ESG debt markets.

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Market overview

The global COVID-19 outbreak has led to a rush in issuance of COVID-19 related social bonds in recent weeks. These social bonds allow borrowers to deploy the proceeds to projects that mitigate COVID-19 related social issues and bring about positive social outcomes, especially for target populations affected by the crisis.

ICMA and the executive committee of the Green Bond Principles, Social Bond Principles and the Sustainability Bond Guidelines have issued guidance on the types of crisis projects that qualify for COVID-19 bonds.

Total aggregate sustainable financing issuance in Q1 2020 was US$92.8bn, up 3% vs Q1 2019, with US$37.8bn green bonds and US$28.3bn from green and sustainability linked loans, according to Refinitiv data.

Selected recent deals

  • The International Finance Corporation continues to grow its ESG footprint in the A$ market, as it priced an A$200m 15-year social bond on 3 April.
  • Housing New Zealand (HNZ) priced NZ$500m Jun-25 tap, and NZ$500m 10-year new issue. The notes were issued as Wellbeing Bonds under HNZ’s Sustainability Financing Framework. BNZ acted as JLM.

Investor and market news

  • The Responsible Investment Association Australia released a study on consumer demand for responsible investing in Australia indicating that 86% of Australians now expect their savings and superannuation to be invested responsibly and ethically.
  • In a Climate Bonds Initiative Green Bond Treasurers survey 98% of respondents said their green bond had attracted new investors and 91% said a green bond facilitated more engagement with investors.
  • The Australian Prudential Regulation Authority (APRA) published a letter to all APRA-regulated entities outlining plans to develop a prudential practice guide focused on climate-related financial risks as well as a climate change vulnerability assessment.

 

Read the NAB Sustainable Finance Update April 2020