Green bonds now issued in Victoria
Author: Darvin Tocmo Date Posted:22 July 2019
Victoria’s efforts to go green reached new heights. It is now the first government in Australia to issue its own green bonds.
Victoria is now officially the first Australia government to issue its own green bonds. This is no ordinary feat for the country, and for the state in particular. It became the first federal government-issued bonds in the world to receive international Climate Bond Certification.
The Treasury Corporation of Victoria (TCV) launched this triple-A rated $300 million issuance to finance a range of new and existing low-carbon projects. According to Tim Palace, the State Treasurer, 17 investors supported the total book order of $300 million.
Global green bond market
Victoria joins other states and countries supporting the tremendous growth of green bonds worldwide. The amount of labeled green bonds issued in 2015 has reached a whopping $US42 billion. This is $5 billion up from its figure in 2014.
China leads this global market. It has 75 billion yuan ($US11.2 billion) worth of green bonds issued in the first half of the year. This is already 33 percent of the world’s total issued in the period.
Last December, investors representing more than $US10 trillion signed a statement welcoming the growth of the climate bonds market. They saw the potential of green bonds in financing solutions to climate change while meeting fixed income yield and risk requirement.
Australia’s green bonds
Three of the ‘big four’ Australian banks are currently dominating the green bond market.
In 2014, NAB issued certified climate bonds for wind and solar. In 2015, ANZ Bank did the same for low carbon buildings, wind, and solar. And in 2016, Westpac provided for wind, low carbon buildings, and commercial property.
The Victorian Green Bonds is remarkable indeed. According to Sean Kidney, CEO of Climate Bonds Initiative, it positioned the Andrews government as a national and international leader.
Its proceeds will go to financing and refinancing state investments in energy efficiency and renewable energy generation. It will also support low carbon public transport in addition to water treatment, including LED traffic lights, mini-hydropower stations, and new trains. Finally, it guarantees the development of a large-scale renewable energy power station.