NZ's first green bond, issued by Auckland Council, starts trading on NZX

Auckland Council will list $200 million of unsubordinated, fixed rate bonds on the NZX Debt Market today. Photo: Getty Images

NZX said the first green bond, created to fund projects that have environmental or climate benefits, will start trading on the exchange operator's debt market today, marking a commitment to grow the nation’s environmentally-friendly finance markets in step with a global trend.

Auckland Council will list $200 million of unsubordinated, fixed rate bonds on the NZX Debt Market today, NZX said in a statement. The coupon is 3.17 percent and the exchange said it will start planting a native New Zealand tree for every $5 million of sustainable finance raised.

"The listing of today’s inaugural green bond in New Zealand supports the exchange’s strategic commitment to grow our country’s environmental markets," NZX said in a statement.

Auckland Council intends to use proceeds from the offer to refinance existing debt used to buy electric trains and equipment, and to help finance new ones.

“The success of our first green bond issue shows that there is clearly a strong appetite in the market for investments that have positive environmental outcomes, which is encouraging given the amount of investment that has been earmarked for Auckland’s low-emission public transport solutions,” Auckland Council acting group chief financial officer Matthew Walker said in the statement.

Its green bonds are expected to be assigned a long-term credit rating of AA from Standard & Poor’s and Aa2 from Moody’s, Auckland Council said last week.

“Environmental finance will play a significant role in funding New Zealand’s infrastructure investment into the future, and green bonds will play a major role in this,” NZX head of issuer relationships Joanna Lawn said in the statement.

Global green bond issuance could jump to a record US$250 billion in 2018, up from US$155 billion in 2017, Moody’s forecast earlier this year.