Director of Product and Channel Development at NAB James Waddell adds: “ACU’s choice of sustainability as their thematic in this transaction was strongly aligned to their mission and NAB was uniquely placed to support them in their vision. Given our deep experience in bringing green and social bonds to the market, we knew we could help ACU break new ground with a unique bond structure.”
Launching into success
Given the use of proceeds was focused on long-term projects, ACU was keen to explore the longer tenor 10-year space. “We looked at other longer tenor markets like the US private placement market, but in the end we felt a 10-year sustainability bond was the sweet spot in terms of the volume and pricing potential,” Jenkins says.
Investors showed early enthusiasm for the university issuer – given the attractiveness of the sector, which is growing significantly, the relatively rare opportunity to buy into an Aa2 credit and, of course, the opportunity to buy a bond to satisfy the increasing appetite for socially responsible investments.
The team presented the $200 million bond at roadshows through Asia – Hong Kong, Singapore, Tokyo – and domestically, leading to an outpouring of interest. “ACU, as one of the fastest growing universities in Australia, saw it receive very strong interest across the investor universe and its commitment to sustainability saw it tick all the boxes for what funds increasingly want to see,” NAB’s Director of Corporate Debt Originations Brad Scott says.
“It’s a sector investors like and its unique connectivity to the Catholic Church, scarcity and strong alignment to ESG mandates were all contributing factors that saw it price the tightest priced 10-year yield in the domestic market to date.”
Unsurprisingly, oversubscriptions reached $500 million, with a mix of international and domestic investors. Initial pricing guidance was 100-105 basis points and the deal ended up coming in at 97 basis points, speaking volumes about the desire for investors to be allocated bonds to this world-first transaction, Scott adds.
INSPIRATION BOTH WAYS
For Jenkins, one of the keys to success in an innovative issue like the sustainability bond was to have a holistic approach. “Having NAB as our arranger, adviser on capital management and ratings, and on capital raising, plus joint lead manager on the deal, meant we had the deep understanding we needed in one place. NAB understood ACU, and they are market-leaders in social and green bond issuance. We trusted their approach, we built on the relationship we already had, and got the pricing outcome we wanted,” he says.
For NAB, the deal was a labour of love. “There’s a tremendous desire at NAB to move Australia forward as we transition to a low-carbon environment and onto a more sustainable basis. We’re focused on innovation and we’re focused on a better outcome for people and communities,” Scott says.
