Issued in early June, the Australian government’s inaugural green bond saw strong demand from more than 105 institutional investors across Australia, Europe, Asia, and North America.
It was heavily oversubscribed, with a final order book of $22.89 billion, more than three times the $7 billion transaction size, according to the Australian Office of Financial Management (AOFM), which issued the bond.
It matures in June 2034 and will pay a coupon of 4.25 per cent.
Announcing the issuance, Treasurer Jim Chalmers said it was a “major milestone” for Australia’s sustainable finance market, observing the enthusiastic response “confirms Australia is a go‑to destination for international green capital”.
“The green bond gives investors from around the world the opportunity to back government-supported projects in Australia which are crucial to climate change mitigation, climate change adaptation, and improved environmental outcomes,” he added.
Additional data from the AOFM revealed that the largest allocation by investor type was to fund managers (63 per cent), which included asset managers, insurance, and pension funds.
Among the fund managers was Pendal, which was “very active” in purchasing the bond, having determined it will have a significant impact, according to Murray Ackman, senior ESG and impact analyst at the investment manager.
A smaller allocation went to hedge funds (11 per cent) and banks, which split their investments between balance sheets (10 per cent) and trading (9 per cent), while the central bank picked up a 5 per cent allocation.
The AOFM also found that much of the bond issue was picked up domestically, with just 35 per cent allocated offshore.
The United Kingdom led the charge in overseas buyers (12 per cent), followed by Europe (11 per cent), and Asia ex-Japan (8 per cent). North American buyers made up 3 per cent of the allocations, while Japan took up 1 per cent.
The AOFM noted the strong issuance followed a four-week roadshow in April and May across Australia, Asia, the United Kingdom and Europe, spanning 84 in-person meetings, four group presentations attended by 34 investors, and almost 30 virtual meetings.
