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Westpac issues climate bond for Japanese retail investors

Westpac Group is the first Australian major bank to issue a climate bond to Japanese retail investors, known as the Uridashi bond market, to support the bank’s funding for climate change solutions.

The A$117.3million, 5 year climate bond was issued via a quasi-public trade through lead manager SMBC Nikko. It was well supported by Japanese retail investors with volume usually attracting A$50-$75 million for this sort of trade.

“This deal is the fourth climate bond issued by Westpac and contributes to the bank’s target to facilitate up to A$3 billion of green bond issuance and arrangement by 2020,” said Richard Salmon, Westpac’s Director of Balance Sheet Funding, Treasury.

“Westpac’s strong credit rating and green credentials met the growing appetite amongst Japanese households for environmentally conscious investments.”

“We are a regular issuer in the Uridashi Bond market but this is the first time we have taken the climate bond route,” Mr Salmon said.

Westpac’s first climate bond was issued in May 2016 into the Australian domestic market and has raised a total of A$1.5billion across all four issuances to date.

Like most green or climate bonds issued by banks, Westpac’s climate bond is a ‘use-of-proceeds’ bond, meaning funds are used to finance or re-finance sustainable projects. For this bond, proceeds will fund renewable energy projects, low carbon commercial property and rail transport.

External auditors provide an Independent Reasonable Assurance Report certifying the Westpac Climate Bond program as meeting the criteria of the Climate Bonds Standards of the Climate Bonds Initiative (CBI) allowing CBI to grant certification for this issuance.

The world’s first Climate Awareness Bond was issued by the European Investment Bank (EIB) in 20073. The first in the Australian market was a A$300 million five-year issue from the World Bank in April 2014, managed by Westpac. According to the CBI the Green Bond market reached US$156.7bn issuance in 2017 and is forecast to jump to US$250 billion in 2018.