For the first time, an Australian climate bond is giving investors access to Australia’s burgeoning rooftop solar and small-scale storage market.
FlexiGroup Limited’s March 2019 $90.9 million green bond issuance is backed by a large portion of solar and a smaller portion of small-scale storage receivables.
Investor confidence in solar receivables has deepened as consumers have capitalised on technology gains and rapid price declines to install rooftop solar. It’s expected a similar pattern will emerge with energy storage as consumers take even more control over their energy use.
With institutional investors increasingly prioritising carbon reduction assets within their portfolios, issuers have the opportunity to develop a broader range of bonds to tap into this demand.
The CEFC has invested $10 million in the FlexiGroup issuance which gives institutional investors ready access to the evolving energy storage market, while further expanding investable green assets through the introduction of a new A-rated green tranche to the transaction structure.
The FlexiGroup green notes have been certified by the global Climate Bonds Initiative (CBI) as being aligned to the Paris Agreement goals and the bond proceeds will be managed appropriately.
In 2016 FlexiGroup issued Australia’s first asset-backed green bond. The CEFC invested $20 million in the $50 million note issuance and invested a further $20 million in FlexiGroup’s 2017 $50 million green note issuance.