National Australia Bank (NAB), as sole arranger and joint lead manager, has launched Australia’s first Green ABS securitisation transaction for FlexiGroup Limited (FlexiGroup).
This landmark transaction represents Australia’s first AUD denominated, publicly offered asset backed green bond note and the world’s first “Climate Bond Certified”ABS transaction to meet the criteria for certification under the Climate Bonds Standard by the Climate Standards Board. FlexiGroup is an established programmatic issuer in the capital markets with Flexi ABS Trust 2016-1 representing the eighth public term transaction, the sixth comprising Certegy receivables.
Certegy Ezi-Pay Pty Ltd (“Certegy”) is a wholly owned subsidiary of FlexiGroup (an ASX200 listed company) that originates, finances and services consumer receivables of which solar consumer receivables represent a significant proportion. Solar receivables have historically been one of the Group’s lowest credit risk industries.
The Flexi ABS Trust 2016-1 transaction was launched with a transaction size of $260m with the senior ranking, $50m Class A2-G Notes to be rated ‘AAA’/‘Aaa’ by Fitch and Moody’s respectively. Flexi ABS Trust 2016-1 will be backed by $256.2m of consumer receivables originated by Certegy with residential solar photovoltaic PV systems representing 33.5% of the pool. Issuance proceeds of the Class A2-G notes will be linked to funding these Solar PV systems.
NAB’s Executive General Manager, Capital Financing, Steve Lambert, said preliminary investor feedback on the transaction including the green bond had been pleasing, with further details on the transaction to follow post pricing.
“NAB is naturally excited to leverage and extend its position as Australia’s leading debt financier of renewable energy and its securitisation capability by now arranging what is both a world first Climate Bond certified securitised Green Bond, and Australia’s first securitised Green Bond.
“We believe the financial sector has an important role to play in supporting the transition to a low-carbon economy, and the exciting opportunities this provides, not only for NAB, but for customers such as FlexiGroup.
“NAB recognises that environmental challenges such as climate change, resource scarcity and natural capital loss and degradation are challenges that affect our economy and society. This landmark transaction offers yet another option for investors and the emerging impact investment market in Australia,” he said.
In recognition of the role NAB can play in supporting the transition to a low carbon economy that limits global warming to less than 20 C, NAB recently adopted 5 commitments:
- Undertake financing activities of A$18 billion over the seven years to September 2022 to help address climate change and support the transition to a low carbon economy;
- Source 10% of NAB’s Australian electricity demand from new and additional renewable energy projects by 2018;
- Engage responsibly on climate policy;
- Report climate change information through mainstream reporting channels;
- Commit to putting a price on carbon and align to the UN Global Compact’s business leadership criteria on carbon pricing.
About Impact Investment
Impact investment is a developing global market, creating opportunities for investors seeking to address social or environmental challenges and generate a financial return. NAB believes it plays an integral role in building a strong economy and intends to be the leading financial institution delivering innovative impact investment opportunities for current and prospective customers. NAB and Impact Investing Australia created the Impact Investment Readiness Fund (IIRF) to provide capacity building grants which support organisations in delivering finance solutions for important social issues.