New Zealand's green, social and sustainability (GSS) bond market grew substantially in 2019 but is still concentrated around a fw repeat issuers. At the KangaNews-Westpac New Zealand Sustainable Finance Summit in Auckland in November 2019, market participants discussed developments in the GSS market and the wider application of sustainability.
Contact Energy (Contact)’s new sustainability-linked loan (SLL) incentivises improvements in areas such as corporate governance, stakeholder engagement and environmental impact. Participants in the deal believe that the SLL product will be applicable for a broad set of borrowers in New Zealand as it is elsewhere.
New capital requirements proposed for banks by the Reserve Bank of New Zealand (RBNZ) are likely to have consequences well beyond the banking sector. Economics in the lending market could be set for change, which may in turn reshape the dynamics of corporate bond issuance in New Zealand.
Contact Energy (Contact) became the first corporate borrower to price a green bond in New Zealand on 22 February. Deal sources say the transaction benefited from greater-than-expected support from domestic retail and offshore institutional investors, and is reflective of continually growing momentum.
On 18 February, Contact Energy (Contact) (BBB by S&P) launched a 5.5-year green bond, for up to NZ$100 million (US$68.7 million), to institutional and New Zealand retail investors. The forthcoming deal has an indicative margin of 145-155 basis points over mid-swap, with the final margin to be set following a bookbuild on 22 February.