Sustainable development goals: €1 billion bond

Sharon Klyne

bluenotes contributor

ANZ has issued the first Euro SDG Tier 2 bond issued by any bank globally, bringing to a total of $A3.4 billion of ANZ bonds on issue in Green and SDG bond format.

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The bond is ANZ’s second Sustainable Development Goals (SDG) Bond in the European wholesale debt capital markets, raising €1 billion of Tier 2 capital to fund its lending to sectors such as aged care, education and the environment.

" The strong market reception was assisted by the important alignment between ANZ’s purpose and our public commitment to sustainable lending.” – Went

Priced at a spread of 140 basis points over the mid-swap, the 10-year (with a five-year call) bond was heavily oversubscribed with orders of over €2.7 billion from over 150 European and Asian institutional investors.

“The strong market reception was assisted by the important alignment between ANZ’s purpose and our public commitment to sustainable lending,” ANZ Group Treasurer Adrian Went said, emphasising the bank’s commitment to sustainability had helped drive interest.

“Investors were genuinely supportive of ANZ’s SDG framework, our approach to investor engagement and our market leading disclosures, including impact reporting.”

ANZ’s updated Sustainability Target

The deal comes after ANZ more than tripled its existing sustainable finance commitment earlier in November, creating a new $A50 billion ‘sustainability target’ as part of its drive to help customers make the transition towards a low-carbon and more sustainability developed economy.

The plan will see the bank expand its five-year $A15 billion ‘low-carbon solutions target’ into an $A50 billion ‘sustainability target’ from October 2019 to September 2025.

Under the new target, ANZ will fund and facilitate at least $A50 billion in sustainable solutions for customers by 2025, including initiatives to help improve environmental sustainability, increase access to affordable housing and promote financial wellbeing.

The bank has already funded over $A19 billion in low-carbon solutions against its $A15 billion 2020 target - a full year ahead of existing plans.

The sustainability target is core to ANZ’s purpose of shaping a world where people and communities thrive.

The bank focuses on three priority areas that underpin its purpose – environmental sustainability, housing and financial wellbeing. The sustainability target is the bedrock of its focus on the environment.

ANZ’s Euro SDG Tier 2 bond, in charts
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SDG bonds are an increasingly popular type of financial instrument aligned with the United Nation’s Sustainable Development Goals. Such bonds are designed to fund or assist in the funding of projects which meet strict criteria around the social and environmental impact.

The Euro SDG bond comes after ANZ signed New Zealand’s first sustainability linked loan (SLL) tied to environmental, social and governance (ESG) metrics in October, as part of a growing number of green finance deals struck by the bank.

The bank has also been active in the market for social housing bonds, most recently in a new deal with Australia’s National Housing Finance and Investment Corporation (NHFIC) and also Housing New Zealand.

Sharon Klyne is Associate Director, Communications at ANZ Institutional

This article was originally published on ANZ's Institutional website.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.