Thursday, June 13, 2024

NZ Sovereign Green Bonds issued

The Government has today welcomed New Zealand Debt Management’s issuance of NZ$3 billion of the New Zealand Sovereign Green Bonds set to mature in 2034.

Launched in September, New Zealand’s Sovereign Green Bond Programme provides the opportunity to invest in projects that contribute to climate and environmental objectives.

“Green Bonds will finance or refinance public sector projects already planned or underway that support our climate change and environmental priorities,” said Finance Minister, Grant Robertson said.

“The bonds are not a new source of debt. Presented in Budget 2022 alongside the Emissions Trading Scheme and NZ Green Investment Finance as complementary policy settings, New Zealand Green Bonds are issued as part of the overall forecast core Crown borrowing programme.”

Green Bond expenditures are limited to last financial year, the current financial year, and the two financial years following this issuance. At least 50% of total Green Bond proceeds will be allocated to current and future expenditures, the Minister said.

“Through meeting internationally recognised standards for selecting and reporting on the projects financed, Green Bonds will increase transparency around climate outcomes.”

Money raised from the bonds will be used to support projects that help reach the Government’s net zero carbon target by 2050.

Climate Change Minister, James Shaw said the role and influence of the finance sector in the transition was often underestimated.

“The transition to a zero-carbon economy is a once in a generation opportunity to build a future that is cleaner, more equitable, and much more prosperous. But when asked where we need to focus to bring down emissions, most people would say agriculture, transport or energy.”

“And they’d be right, we do need to see progress in all those sectors, but that progress will need financing. The more we can do to align capital and investment with a low-carbon, climate-resilient future, the sooner we will get there. That’s why the issuing of Green Bonds in New Zealand is such a welcome step forward.

“Around the world we have seen that there is substantial and growing investor demand for sovereign green bonds. And while they don’t amount new debt, they do mean that the debt we are taking on will come with strings attached – an extra layer of accountability on our journey to net-zero,” Mr Shaw said.

The bonds, which carry a coupon of 4.25%, were issued at a yield to maturity of 4.35%. Total book size, at final price guidance, exceeded NZ$7.5 billion.

Settlement will occur on 22 November 2022. 

Further information on the Green Bond Programme is available on the New Zealand Debt Management website here.

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