Australia launches Green Bond program to boost sustainable finance
The funds raised from the green bond program will support various projects that aim to reduce greenhouse gas emissions, increase renewable energy, and enhance biodiversity conservation - all essential for Australia’s energy transition and environmental goals
The Australian Government has issued $7 billion of its inaugural green bond. The issuance has attracted substantial interest with over $22 billion in bids from 105 investor institutions across Australia, Asia, Europe, and North America, reflecting Australia's status as an attractive destination for green capital investment.
The funds raised from the green bond program will support various projects essential for Australia’s energy transition and environmental goals. These include green hydrogen hubs, community batteries, and clean transportation initiatives, alongside programs aimed at conserving biodiversity. These projects will deliver environmental benefits such as reducing greenhouse gas emissions, increasing renewable energy production, and enhancing biodiversity conservation.
The Australian Office of Financial Management (AOFM), responsible for the bond issuance, reported that the bond was priced at a yield to maturity of 4.295%. This yield attracted strong demand from investors, resulting in a final order book of $22.89 billion—more than three times the transaction size.
The investor base was diverse, with around 35% of the bonds allocated to offshore investors. Of the 105 institutional investors who participated, 15 were new to AOFM syndicated deals. The issuance process was supported by major financial institutions including the Commonwealth Bank of Australia, Deutsche Bank, National Australia Bank Limited, UBS AG, and Westpac Banking Corporation.
The Australian Government’s Green Bond Framework outlines the key climate change and environmental priorities that will be financed by green bonds. This framework adheres to the International Capital Market Association’s Green Bond Principles 2021.
The Green Bond Framework includes stringent criteria for eligible projects, focusing on climate change mitigation, adaptation, and improved environmental outcomes. Notably, projects related to nuclear energy, arms and ammunition, alcohol, tobacco, recreational drugs, gambling, and fossil fuels are excluded from funding.
To maintain transparency, the government will commence annual allocation and impact reporting in 2025, detailing how the proceeds are used and the environmental benefits achieved.
