Deal highlights:
Issuer: Macquarie University
Size: AUD250 million ($184 million)
Maturity: Two tranches – 10 years and 25 years
Coupon: 3.58% and 4.50%
Use of proceeds: Green buildings; alternative energy and energy efficiency; pollution prevention and control; sustainable water and wastewater management; environmentally sustainable management of living natural resources and land use; access to essential services; socioeconomic advancement and empowerment.
External review: Sustainalytics
Lead managers: National Australia Bank and HSBC
Credit rating: Aa2 (Moody's)
Other highlights/notable features: Two tranches, one of which is the longest-dated labelled sustainability bond.
The AUD250 million ($184 million) dual-tranche sustainability bond from Australia's Macquarie University in August 2018 was a pioneering transaction in several respects. In particular, it was the first dual-tranche university bond in AUD and includes the longest-dated, labelled sustainability bond.
The transaction comprises a AUD200 million, 10-year, tranche paying 3.58% and a AUD50 million, 25-year, tranche paying 4.50%. It was two-times over-subscribed, with demand dominated by 'high-quality' asset managers and life insurance funds, according to one banker involved in the deal. This strong interest from investors enabled the 10-year paper to be priced at the tightest credit spread for a 10-year AUD university bond.
"It was encouraging to see the investor support showing increased focus on sustainability in Australia," commented one judge.
The university, which has more than 40,000 students and 3,000 staff, has a long-standing commitment to sustainability and intends on using the proceeds of the bond to develop its campus in a way that delivers positive environmental and social outcomes.
Eligible environmental expenditures include green buildings, alternative energy, energy efficiency, pollution prevention, and the management of wastewater and natural resources.
Eligible social expenditures relate to access to essential services and socioeconomic advancement and empowerment, specifically for programmes focused on 'disability-sensitive' learning.
Among the university's sustainability goals are:
- to achieve a 40% reduction of greenhouse gas emissions intensity (from a 2009 baseline);
- to reduce potable water consumption by 40% below 2007 figures in new buildings; and
- to prevent 90% of waste from ending up in landfills by 2020.
Sustainalytics reviewed the underlying Sustainability Financing Framework and concluded that it is fully aligned with the Sustainability Bond Guidelines 2018. It added that it also aligns with 11 of the 17 UN Sustainable Development Goals.
"It's great to see the alignment with the SDGs from a pure-play," said one of the awards judges.