16 March 2018

Green bonds only part of the solution

Simpson Grierson partner Simon Vannini sees Auckland Council’s recent move to establish a green bond framework as positive but only part of the overall solution to fund new infrastructure.

“With all of the recent discussion around funding for much needed infrastructure, in particular in Auckland, we’re encouraged to see Auckland Council’s recent announcement that it has voted to establish a green bond framework,” says Vannini.

“Importantly, the Council has confirmed that this was not about increasing the amount of borrowed money, but rather looking to replace some current bonds through a refinance and changing these into green bonds.”

The law firm says it’s good to have green bonds as part of a stable of ideas for funding, however they are not convinced this will of itself create the extra interest and demand which Auckland Council (and other regional authorities) will be looking for to fund the infrastructure shortfall in their regions.

“In order to attract both institutional and retail investors in these types of infrastructure investments, green bonds should be looked at as one of a range of debt funding options around financing new infrastructure - which may also include listed bonds,” says Vannini.

“These types of bonds should be part of the solution, but with regional authorities having to deal with debt caps it is unlikely they will be a complete answer.”

ENDS

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