TCorp to provide liquidity for its latest GSS bond
New South Wales Treasury Corporation (TCorp) says it will provide liquidity in its latest green, social and sustainability (GSS) bond and believes growing liquidity in the asset class is its next evolutionary phase. TCorp’s A$1.8 billion (US$1.2billion) sustainability bond is the issuer’s second foray into the GSS bond space, following a A$1.8 billion green bond last year.
As well as the three assets underpinning TCorp’s green bond – Sydney Metro Northwest, Newcastle Light Rail and Lower South Creek Treatment Programme – the proceeds of the sustainability bond have been earmarked for five new green and two new social projects.
The former are five waterway naturalisation and stormwater improvement projects, and the latter are the state’s transport access programme and schools programme.
Source: New South Wales Treasury Corporation 25 November 2019
Source: New South Wales Treasury Corporation 25 November 2019
Deal pricing
Issuer name: New South Wales Treasury Corporation
Issuer rating: AAA/Aaa
Pricing date: 25 November 2019
Maturity date: 20 March 2025
Lead managers: ANZ, Bank of America Securities, National Australia Bank
Volume: A$1.8 billion
Final book: A$2.5 billion
Number of investors: 56
Coupon rate: 1.25%
Margin: three-year futures contract +43.5bp
Margin at launch: three-year futures contract +43.5-46.5bp area
Geographic distribution: see chart 1
Distribution by investor type: see chart 2
The size of asset managers’ tickets was smaller in this transaction but bank balance-sheet participation stepped up – these investors are also looking at this space more broadly.
We initially expected the deal to be smaller than last year’s green bond because of the inclusion of social assets. The feedback from the investor roadshow was very positive, though – most investors were happy to see the asset pool evolve. Investors want to invest in social outcomes and they want to see these outcomes reported.
We expect to see more liquidity in this bond. Over time we will increase issuance in this maturity either by tender or syndicated tap. This is the next phase of evolution of the market.
