The State Government’s inaugural $1.9 billion green bond will support projects with “positive environmental outcomes” including the decarbonisation of WA’s main electricity grid.
The “use of proceeds” bond, which matures in July 2033, was heavily oversubscribed with more than $6b in bids from over 60 investors.
The proceeds are earmarked for projects including batteries and wind farms, electric vehicle charging infrastructure and rebates and standalone power systems. It includes Synergy’s battery systems to be built in Kwinana and Collie.
Deputy Premier the Hon Rita Saffioti MLA says the successful issue follows two years of work by Western Australian Treasury Corporation (WATC) to build the State’s environmental, social and governance (ESG) credentials to an expanding pool of domestic and international investors. This in turn also helps lower the State’s borrowing costs.
“The green bond issue was heavily oversubscribed, highlighting the confidence investors have in our commitment to deliver projects with positive environmental outcomes and our strong financial performance,” she says.
ESG conscious
Saffioti says global investors are becoming increasingly ESG aware.
“The successful issue of the State’s inaugural green bond is a key milestone in the evolution of our borrowing program,” she says.
“It reflects the State Government’s significant investments in initiatives that deliver positive environment, social and governance outcomes.”
The credentials of the green bond are verified by an independent second party, global ESG research firm Sustainalytics.
Sustainable investment
Last year, S&P Global raised its long-term issuer credit ratings on WA, to AAA from AA+ due to “WA’s continued budgetary outperformance compared with its domestic and global peers”.
Moody’s also lifted its WA rating from AA1 ‘stable’ to ‘positive’. The agency says – despite significant stress emerging in the global economy – windfall gains, tight expenditure controls, and improving revenue diversification have maintained WA’s debt burden “at moderate levels, strengthening the State’s capacity to respond to future shocks”.
The report highlights the possibility for further improvements in the State’s credit assessment, noting investments to address climate change and social housing in assessing the State’s ESG profile.
The growing popularity of green bonds reflects a global shift towards more sustainable investment practices and the increasing recognition of the importance of addressing environmental challenges.
Australia will launch the nation’s first sovereign green bond in 2024 to help fund federal efforts to curb climate change.
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