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- Local and overseas investors have oversubscribed the Federal Government’s first sustainable housing bond for $343 million
- The funds raised will directly support the delivery of more than 1100 new homes across Melbourne
- The National Housing Finance and Investment Corporation (NHFIC) said the bond would provide a fixed rate of 2.335 per cent for 15-year interest-only loans to Community Housing Ltd (CHL)
- This will save the community housing provider approximately $50 million in interest payments and providing a return to CHL of around $200 million over the 40-year life of the project, according to NHFIC
Local and overseas investors have oversubscribed the Federal Government’s first sustainable housing bond for $343 million.
The National Housing Finance and Investment Corporation (NHFIC) recently finalised its first sustainability bond with the issuance more than two times oversubscribed.
The funds raised from this bond will directly support the delivery of more than 1100 new homes across Melbourne, as part of NHFIC’s involvement in a Community Housing Limited (CHL)-driven Building Communities consortium.
The AAA-rated, Government-guaranteed bond is NHFIC’s first sustainability bond and its longest tenor bond.
NHFIC said the bond would pass on the benefits of strong investor demand by providing a fixed rate of 2.335 per cent for 15-year interest-only loans to CHL.
This will save the community housing provider approximately $50 million in interest payments and provide a return to CHL of around $200 million over the 40-year life of the project, according to NHFIC.
These funds are available to be reinvested into more social and affordable housing.
NHFIC has provided funding of around $400 million in loans and grants through the consortium, including $51 million from the National Housing Infrastructure Facility to accelerate critical infrastructure.
The funds raised from this bond will support the delivery of around 600 social homes, 450 affordable and private rental homes and 50 supported disability accommodation across sites in Brighton, Flemington and Prahran.
NHFIC CEO Nathan Dal Bon said its first sustainable bond brought together the not-for-profit, public, private and industry sectors to support and deliver more social and affordable housing.
“With a 15-year term, it’s also our longest tenor bond to date and brings the total value of NHFIC’s social bonds issued to over $1.5 billion since the corporation was established,” Bon said.
“It is another key milestone in NHFIC’s objective to build a new asset class focused on supporting subsidised housing.
“This sustainability bond has drawn strong interest from both the local and international investment community (12 international investors out of 30 total), including Australian super funds, sovereign wealth funds and off-shore ethical investment funds.”
CHL managing director Steve Bevington said that with this bond issuance investors had an opportunity to support inclusive and essential social housing which is coupled with positive environmental outcomes.
ANZ, CBA, Deutsche Bank, UBS and Westpac were the joint lead managers for the issuance.
“This tenor has brought welcomed duration diversity for investors, where A$ high grade supply has generally centred on shorter tenors which receive RBA quantitative easing programme support,” Commonwealth Bank head of debt capital markets Truong Le said.
“Most importantly, NHFIC has been able to achieve effective term funding to help the CHL consortium deliver new social and affordable homes across Melbourne.”
