ESG space getting hotter… in fixed income too

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TCorp, NSW’s $107 billion state government fund manager, has raised $1.8 billion for its latest sustainability bond – matching its record set last year. And Uniting Financial Services, the national Uniting Church fund manager, has done a deal with ANZ Bank to help it with wider distribution.

UFS has also hinted that a ‘sustainable development goals’ bond issuance may follow the new marketing effort, assuming market conditions were suitable. ANZ has arranged a series of fixed income investor meetings in Sydney and Melbourne for UFS, starting today (November 18). The not-for-profit manager has been upping its wider marketing efforts recently, including the recruitment of experienced funds management marketer John Hamer early this year.

With the TCorp nominal ‘Sustainability Bond’, with a March 2025 duration, investor demand was strong with the book being oversubscribed by $740 million at the final price and attracting a yield of 1.245 per cent, the firm said in a statement.

David Deverall, TCorp chief executive, said: “We’re absolutely delighted by the positive results we’ve achieved with our inaugural sustainability bond to support the NSW Government’s infrastructure plans. Investors have embraced the social assets introduced to complement the green assets in the pool.”

Asset managers accounted for 62 per cent of investors and the bulk of investors – 87 per cent – were from Australia. There appeared to be little or no interest from super funds, judging by the figures released last week. This year, proceeds of the sustainability bond have been earmarked towards seven new projects – five green and two social – as well as the three green projects that were part of last year’s inaugural green bond.

Fiona Trigona, head of ‘funding and balance sheet’ at TCorp, said: “The sustainability bond attracted 56 investors, similar to last year’s green bond issue. We also picked up new investors – a good achievement and testament to the fact that investors are genuinely interested in high quality, sustainable investing over the longer term.”

The inaugural $1.8 billion 10-year ‘Green Bond’ issued in November 2018 was also oversubscribed by more than $700 million and is the largest single green bond issued to date in the Aussie dollar market.

With the UFS initiatives, Warren Bird, executive director of treasury and investments at UFS, said: “One of the key attractions for potential investors is the strength of the underlying ethical investment principles of the Church, as embedded in the ethical and ESG investment policy that UFS champions and implements. “The alignment of our ethical principles with the United Nations Sustainable Development Goals (SDGs) meets the growing demand among investment firms to put their capital to work in ways that support the achievement of the SDGs,” he said.

UFS is one of the oldest fiduciary managers to have adopted ethical and general ESG principles, dating back to 1980, before the birth of the modern superannuation system. Both its balance sheet assets of about $1.2 billion and managed fund portfolios of about $400 million are aligned with the UN’s ‘Sustainable Development Goals.’

An inaugural Aussie-dollar-denominated, ‘Sustainable Development Goals’ (“SDG”) subordinated-bond transaction is under consideration, subject to market conditions, UFS said in an investor statement.

– G.B.

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