Establishing NHFIC’s ESG [environmental, social and governance] credentials has been a priority. Our first sustainability bond issuance was a milestone and part of our strategy to broaden our product offering. This was also driven by demand from community housing providers (CHPs).

We plan to diversify further – into longer tenors and by issuing more social and sustainability bonds. The project supported by the sustainability bond had the right features to support longer tenor. Combined with the development’s sustainable features, it also enabled us to tap into a new group of investors – particularly from offshore.

I think so. In our discussions with investors there was comfort with the technology and the duration matching. The project includes established and accepted technologies – such as electrification, solar power generation and rainwater harvesting – the cost of which has come down.

There is also a nice alignment with the goals of the community housing sector: for CHPs, it means environmentally friendly housing that can deliver savings to tenants and help with their ongoing cost pressures.

Since NHFIC was established we have seen high demand from the community housing sector and our pipeline remains very strong. Several stimulus and investment packages – including from Tasmania, Victoria and Queensland – combined with long-term financing from NHFIC have enabled the CHP sector to invest in new projects.

Meanwhile, we have set up our bond programme so we can issue social and sustainability bonds. There is a close connection between NHFIC’s finance and outcomes, specifically supporting people in need and providing stable accommodation and support services. Investors have shown strong interest in these outcomes: our bonds are heavily oversubscribed and a key challenge for us is to find more projects to channel funds to meet this demand.

Absolutely. NHFIC bonds are a unique product offering in the Australian market. We are an early adopter and champion of social and sustainability bonds for social and affordable housing outcomes. We are developing a strong track record with six bonds in the market, and each time we issue we see repeat investors and attract new ones.

There is high degree of transparency in NHFIC’s business model with a very clear line of sight between bond issuance and the community housing sector. There is still no shortage of need when it comes to subsidised housing. Our liquidity cap was increased by another A$500 million (US$356.8 million) just before Christmas, enabling us to continue issuing bonds.

As we continue to expand and diversify our investor base, I’m confident our product offering will remain unique and will continue to appeal to investors.

There was strong investor demand for our FRN, but our appetite to issue depends on CHPs’ requirements. In mid-2021, there was a particular requirement for floating-rate funding from a CHP in relation to transactions supported by the NSW SAHF [Social and Affordable Housing Fund].

There is a mutual desire from NHFIC and many of its investors to establish benchmark bond transactions to enhance secondary market liquidity, and we need to balance these aspects.

Moving forward, we intend to increase the sophistication of our treasury risk management and look at products that will enhance our offering to CHPs, such as swaps and other instruments to manage interest rate risk.

CHPs typically have low but stable revenues so they can be sensitive to interest rate movements. We envisage working closely with them in the coming year to structure products and risk management solutions that meet their needs in an uncertain interest rate environment.

We have been pleased to see a narrowing of the price differential between sovereign and NHFIC bonds, which is a saving we can pass through to our CHP clients. A lot of factors influence this margin, but we have seen a substantial compression since we started issuing. It is a good barometer for us when it comes to investor interest.