Exclusive: Australia Debt Head: Next New Green Bond To Be Issued by Syndication by 2027

21 January 2025

Exclusive: Australia Debt Head: Next New Green Bond To Be Issued by Syndication by 2027

By Marta Vilar – MADRID (Econostream) – Australia will issue a new green bond line via syndication in 2026 or 2027, according to Australian Office of Financial Management’s CEO Anna Hughes.

In an interview with Econostream on 20 January (transcript here), Hughes said that the AOFM would issue around $2 billion of the June 2034 green bond line through tenders of around $300 million each in 2024-25.

‘The next new green bond will be issued by syndication in a year or two’, she said.

Recommendations from investors suggested the AOFM should build a curve of green bond lines over time instead of concentrating issuance into one maturity, according to Hughes.

Asked about the launch of exchange-traded Green Treasury Bonds for retail investors on the Australian Securities Exchange, she replied that the AOFM was still planning to make them available ‘by the end of 2025’.

Despite other sovereign issuers, like Germany, having abandoned the inflation-linked bond market, Australia had no plans to exit it but was monitoring the moves of other peers in this regard.

‘We are looking at the Treasury Index Bond market in advance of monthly CPI and whether we should adopt a more internationally consistent formula’, she added.

Regarding the decision to move index bond tenders from Tuesday to Thursdays, Hughes said that the AOFM was testing whether this new approach would help them be ‘more consistent/predictable with our Treasury Indexed Bond tender weeks’, as this would allow the AOFM to avoid conflicts with the RBA and monthly CPI.

‘We will review this decision prior to the 2025-26 program update’, she said.

As for which part of the curve was gaining more attention from investors, Hughes said that the majority of investor demand was still in the most liquid 3- and 10-year segments of the curve.

‘Higher yields in the ultra-long part of the curve (out to 30 years) are attractive for many investors, however the investor base in this part of the curve is mostly offshore and is smaller than for more liquid, shorter tenors’, she said.

The AOFM currently had no plans to extend its maximum maturity over 30 years but rather was planning to maintain the curve around that level ‘when the 2054 rolls down to around 28 years’, she indicated.

Treasury Notes would be used more actively for cash management reasons, according to Hughes, ‘so you can expect T-Notes on issue to increase over time.’

 

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