Washington, DC, April 16, 2014 – Today, the World Bank (International Bank for Reconstruction and Development, IBRD, rated Aaa/AAA) priced a AUD 300 million 5-year fixed rate Kangaroo green bond, the first of its kind in the Australian domestic market. World Bank Green Bonds support its lending to eligible development programs that are designed to address the challenges of climate change. This AUD benchmark follows two World Bank benchmark-sized green bonds this year, issued in USD and EUR.
With today’s issue, the World Bank has once again expanded the investor base for the green bond market. The World Bank has now issued a total of USD 5.6 billion equivalent in green bonds since its inaugural green bond in 2008.
The bonds were placed with 15 investors, including Aberdeen Asset Management, AMP Capital, Australian Ethical Investment Ltd, Colonial First State Global Asset Management, Local Government Super, QBE Insurance Group Ltd and UniSuper. The investors involved in the trade all have a specific interest in supporting climate-smart projects within their investment mandates, alongside their traditional investment considerations such as safety of investment and risk-adjusted returns. UniSuper provided the lead order for the transaction.
“UniSuper, one of Australia's largest not-for-profit superannuation funds, has been working with the World Bank for several months as it has been refining its Socially Responsible investment options to include green bonds. UniSuper is pleased to cornerstone the World Bank’s first green bond issue into the Australian market. UniSuper welcomes the partnership with the World Bank and the underwriters’ support which has facilitated this inaugural Australian dollar green benchmark bond. This transaction demonstrates the World Bank’s leading role in further developing the green bond and SRI debt capital markets overall. UniSuper is committed to the sustainable finance effort and is proud to contribute to it through this transaction” said Talieh Williams, UniSuper’s Manager, Governance and Sustainable Investment.
The distribution by investor type was as follows: 42% of the bonds were placed with asset managers, 35% with superannuation funds, 20% with insurance companies and 3% with banks. The geographic distribution was as follows: 77% of the bonds were placed with Australian investors, 10% with investors in Japan, 2% with investors in Asia and 11% with US investors.
RBC Capital Markets and Westpac Institutional Bank are the joint-lead managers for this transaction.
“This inaugural green benchmark in the Australian market expands the green bond institutional investor base to Australia. It is a further step in building the green bond market that mobilizes private sector financing for climate-smart activities to help finance the transition to a low-carbon economy, while helping countries adapt to the effects of climate change and build resilience. This has been a true collaboration between UniSuper, the lead investor for this transaction, all the other investors and the underwriting banks – all working together to invest in a more sustainable future," says Doris Herrera-Pol, Director and Global Head of Capital Markets at the World Bank.
The World Bank issued its first green bond in 2008, responding to requests from large institutional investors looking for a liquid, plain vanilla product that explicitly supports the financing of climate- related projects. Since then, the World Bank has mobilized USD 5.6 billion equivalent through over 60 green bond transactions in 17 currencies to support the financing of eligible projects in its borrowing member countries around the world. Examples of the types of projects supported by World Bank Green Bonds include renewable energy installations, energy efficiency projects, new technologies in waste management and agriculture that reduce greenhouse gas emissions and help finance the transition to a low carbon economy, as well as financing for forest and watershed management, and infrastructure to prevent climate-related flood damage and build climate resilience.
"Westpac is pleased to have partnered with the World Bank to bring the first ever green bond to the domestic market. The World Bank’s Kangaroo transaction will add significantly to the awareness of this important and growing aspect of international markets in the region. The transaction has expanded the universe of investors in this product and represents a true milestone for the Australian market. Westpac’s involvement is aligned to our broader sustainability strategy and we are proud to be associated with the deal.” says Mark Goddard, Head of Debt Securities at Westpac Institutional Bank.
"The World Bank remains a market leader in the development of global debt capital markets and this domestic AUD denominated green Bond further cements this position. With climate change continuing to dominate global headlines, green Bonds provide the perfect opportunity for socially responsible investors to participate in projects that promote environmental sustainability. RBC Capital Markets is pleased to be involved in this important transaction in the Australian market," says Enrico Massi, Head of Debt Capital Markets, Asia-Pacific at RBC Capital Markets.
Issuer: World Bank (International Bank for Reconstruction and Development, IBRD)
Issuer rating: Aaa/AAA
Amount: AUD 300 million
Settlement date: 29 April 2014
Coupon: 3.50% semi annual
Maturity date: 29 April 2019
Issue price: 98.960%
Reoffer price: 98.960%
Clearing system: Austraclear
Joint lead managers: RBC Capital Markets and Westpac Institutional Bank
About the World Bank
The World Bank (International Bank for Reconstruction and Development, IBRD), rated Aaa/AAA (Moody’s/S&P), is an international organization created in 1944. It operates as a global development cooperative owned by 188 nations. It provides its members with financing, expertise and coordination services so they can achieve equitable and sustainable economic growth in their national economies and find effective solutions to pressing regional and global economic and environmental problems. The overriding goal is to achieve major, sustainable improvements in standards of living worldwide. It has been issuing bonds in the international capital markets for over 60 years to fund its activities. Information on bonds for investors is available on the World Bank Treasury website: (www.worldbank.org/debtsecurities).