Case Study - NSW TCorp 2030 Green Bond

NSW TCorp has just issued a new $1.3 billion November 2030 Green Bond, which was three times oversubscribed at final price and is attracting a yield of 1.11 per cent. TCorp head of funding and balance sheet, Fiona Trigona, responded to questions from Industry Moves and explained the process of choosing service providers.

What goes into launching a new product?

The NSW Sustainability Bond Programme has a robust governance framework and when launching a new bond issuance, there are numerous considerations. We need to verify the size of the eligible asset pool with the NSW Sustainability Committee and to decide on the right bond format (Green, Social or Sustainability).

We also actively monitor investor demand and issuer activity in the ESG market along with maintaining an understanding of the domestic and global market, and key economic announcements. Ultimately, cross government collaboration was key to ensuring the governance of the programme to enable the launch of this transaction.

Why did you decide to launch now?

Investor demand for ESG bonds has been unprecedented this year - we received strong investor feedback giving us confidence to issue at this time. We had issued an inaugural Green Bond in 2018, then an inaugural Sustainability Bond in 2019. A third bond issuance under the Programme this year allowed us to create an ESG curve.

How did you research market opportunities?

We look at feedback from our investors and through our dealer panel. We are aware there was a lack of supply in ESG bonds in the market and investor demand is only growing in this space.

What challenges did you face and how were they overcome?

We were restricted on deal marketing given the current COVID-19 environment, which limited our ability to present new projects to investors. With this in mind, we decided to utilise the same green assets from our inaugural 2028 Green Bond for this new bond. As the previous green bond and assets were certified by the Climate Bonds Initiative (CBI), investors were already aware of these three assets (Sydney Metro North West, Newcastle Light Rail, Quakers Hill and St Marys Water Treatment Facility) and minimal further work would have been required on their side.

How did you decide on service providers?

We received Programmatic Certification from CBI for the inaugural November 2028 Green Bond issued in 2018. That enabled us to receive pre-issuance CBI certification before the issuance of this new November 2030 Green Bond. We selected CBI, as their certification of compliance with the Climate Bonds Standards provides investors with a screening tool to assure the low-carbon nature and integrity of their fixed-income investments.

We utilise EY for ongoing assurance of the NSW Sustainability Bond Programme. EY provides assurance in relation to the Climate Bonds Standards, the International Capital Markets Association (ICMA) sustainability bond guidelines, social bond principles and green bond principles, as well as TCorp's internal policies and procedures. This provides a holistic view of the NSW Sustainability Bond Programme in accordance with relevant external and internal standards, given the programme comprises both Green and Sustainability Bonds.

As we had $3.9 billion on issue and we have issued bonds under this Programme over the last two years, we were aware of the ESG credentials of different banks and decided to appoint NAB, UBS and CBA for this transaction

Can you explain the fee structure?

We cannot disclose this information.

Please contact us at [email protected] if you would like your product to be considered for a case study.