Australian based credit finance group FlexiGroup has made a landmark issue of green Asset Backed Securities, a type of bond, raising $50 million to refinance residential rooftop solar systems in the first issue of their type in Australia.
The issue is small, but its significance is greater – bringing rooftop solar into the mainstream bond market in Australia for the first time, and providing an avenue for cheaper finance for the technology. It is also described as the first “Climate Bond certified securitised Green Bond”
FlexiGroup is a major financier for rooftop solar systems, through its subsidiary Certegy Ezy Pay, with more than 120,000 customers and links with most major solar installers.
In the last 12 months, it gained $200 million in revenues from solar financing and it sees the rooftop solar and the nascent battery storage as one of its major growth areas.
“The next major phase for the domestic solar PV sector is solar battery storage systems which are rapidly being developed and will become increasingly significant in sales volumes over the next 1 – 5 years,” it said in a recent results presentation.
The $50 million issue, arranged by National Australia Bank, and verified by Norwegian-based DNV.GL, was certified under the Climate Bonds Solar Standard.
Interestingly, the issue was part of a broader $260 million issue for consumer receivables, but the solar-backed securities was more keenly sought, with the certified green notes closing five basis points lower than the non-green notes.
“This is exciting … a pricing benefit for green bonds right in front of our eyes?” said Sean Kidney, the Australian founder and CEO of the Climate Bonds Initiative.
“Australia is blessed with abundant sunshine and high penetration of rooftop solar systems. Despite some recent clean energy policy uncertainty, the fundamentals are strong for continued growth in solar.
“Flexigroup’s green ABS deal indicates a pricing benefit arising from the green label – this is exciting news for the market and potential issuers out there … and could well be a sign of things to come for green solar bonds.
Steve Lambert, the head of capital financing at NAB, said the issue extended its position as Australia’s leading debt financier of renewable energy.
“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.”