The Australian Office of Financial Management has priced the country's inaugural federal sovereign green bond, raising AUD 7 billion. The bond carries a 4.25% coupon and matures in June 2034, according to a statement published by the AOFM. The transaction marks the first time the Australian federal government has accessed the green bond market as an issuer.
The offering attracted AUD 22.89 billion in orders from domestic and international investors, implying a bid-to-cover ratio of approximately 3.3 times the final issuance amount. The AOFM described the demand as reflecting significant domestic and global interest.
SYNDICATE AND STRUCTURAL DETAILS
The bond was brought to market via a syndicated transaction with a lead management team comprising Commonwealth Bank of Australia, National Australia Bank, Deutsche Bank, UBS AG Australia Branch, and Westpac. National Australia Bank and UBS served jointly as structuring advisers, responsible for the development of the green bond framework that defines the categories of federal government expenditure eligible to be financed by the bond proceeds.
The green bond framework aligns with the International Capital Market Association's Green Bond Principles, the internationally recognised voluntary guidelines that provide the market with a standard for categorising and disclosing the use of proceeds. Eligible expenditure categories under the Australian framework include clean energy projects, sustainable transport infrastructure, land conservation, and other initiatives with defined environmental benefits. The framework was subject to independent review.
AUSTRALIA JOINS SOVEREIGN GREEN BOND ISSUERS
The transaction places Australia among developed-economy sovereigns that have issued green bonds at the federal level. European governments including Germany, France, the United Kingdom, and Italy have issued sovereign green bonds.
The AOFM indicated that it would evaluate further green bond issuance in future years, subject to the ongoing availability of qualifying expenditures under the framework and prevailing market conditions.
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