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In the wake of Australia’s first domestic true-corporate green-bond deal, the transaction’s arranger says internal and external drivers point to growing momentum in the asset class. Investa Office Fund (IOF) was well positioned to be the first domestic mover, but it is far from unique as a potential issuer – especially in the property sector.
Socially responsible investment came into the spotlight during the final week of March, as Commonwealth Bank of Australia printed A$650 million (US$497 million) in its debut climate bond and Investa Office Fund issued Australia's first-ever domestic corporate green bond. Meanwhile, Latitude Card Trust priced its debut master-trust asset-backed transaction with an upsize to A$1.1 billion.
Having printed its first green bond on 28 March – also the largest to date by a bank in Australia – Commonwealth Bank of Australia (CommBank) says global demand and increasing issuer engagement with the asset class point the way to significant future growth. CommBank issued A$650 million (US$497.1 million) of five-year climate bonds including fixed and floating tranches.
Solid domestic real-money demand supported the long-dated, dual-tranche deal issued by WSO Finance (WSO), the financing entity of the Westlink Motorway Group and 50 per cent subsidiary of Transurban. The issuer tells KangaNews it had a strong preference to execute in the local market while lead managers note a positive shift in domestic investor sentiment.
New Zealand’s Heartland Bank (Heartland) (BBB from Fitch Ratings, with an expected issue rating of BBB-) placed a tier-two transaction in the Australian dollar market on 31 March. The deal had indicative volume of A$20 million (US$15.3 million) and price guidance of 415 basis points over bank bills for 10-year non-call five tenor.
Investa Office Fund (IOF) (BBB+) launched and priced a green-bond transaction on 30 March. The issuer was seeking a minimum of A$100 million (US$76.7 million) of seven-year bonds at an indicative margin of 175 basis points over semi-quarterly swap. The transaction is the first true-corporate green-bond issuance in the Australian domestic market, according to KangaNews data.
On 30 March, RedZed Lending Solutions (RedZed) printed its first nonconforming residential mortgage-backed securities issue of 2017. Indicative volume on RedZed Trust Series 2017-1 was A$250-300 million (US$190.8-229.0 million).
Latitude Australia Credit Card Loan Note Trust priced on 31 March. The deal is a master-trust securitisation originated by Latitude Finance Australia (Latitude) via Latitude Card Trust, which disclosed initial volume and price guidance on 22 March and launched on 29 March.
ME Bank (BBB+/A3) priced a new, three-year Australian dollar senior floating-rate (FRN) transaction on 29 March. Price guidance was 120-125 basis points over three-month bank bill swap rate.