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Australia’s fledgling social and sustainability bonds market is taking flight with $805 million in issuances by the National Finance and Investment Corporation in the past year oversubscribed by at least two times.
The continued growth in the investor base, both locally and from overseas, reflects the emergence of social and affordable housing as a recognised investment asset class.
More than half of the new institutional investors were from offshore.
Funds raised from the issuance of the government-guaranteed bonds are used to finance or refinance housing projects that have positive social and green outcomes.
According to the latest National Housing Finance and Investment Corporation (NHFIC) Social Bond Report, its 2020-21 issuance supported more than 4900 dwellings.
About two-thirds (65 per cent) of the community housing provider (CHP) loans funded by the three bonds underpinned new housing supply.
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The bond issuance—including NHFIC’s first sustainability and longest tenor bond (15 years), and first floating rate note—also provided nine CHPs with an estimated $161 million in fee and interest savings, through longer tenor and lower-interest loans.
NHFIC chair Adrian Harrington said its social bonds now accounted for more than a quarter of all Australian dollars issued.
“Our bond program has attracted close to $2 billion from more than 60 institutional investors,” he said. “This makes us a leading issuer of social bonds in Australia.”
He said the issuance of NHFIC’s first sustainability bond had helped attract new investors to support sustainable, social and affordable housing across the country.
“The strong support we have received from the institutional investors bodes well for social and affordable housing becoming a more established investment asset class in Australia,” Harrington said.
The CHPs supported by the bonds issued by NHFIC during the 2020-21 financial year included Building Communities (Vic), Common Equity Housing Limited, Foundation, Housing Choices SA, Housing Choices Tasmania, Mission Australia, Pacific Link, SGCH Group and Unison.
