01Performance

CEFC ANNUAL REPORT / 2015–16

FlexiGroup Green Bond

The CEFC invested $20 million in a new securitisation sponsored by FlexiGroup Ltd. This is Australia’s first certified green bond securitisation transaction to be linked to solar PV and renewable energy assets.

Project scope

FlexiGroup has financed about 17,800 consumer solar installations through its wholly-owned subsidiary Certegy. It linked these assets to a $50 million “green” tranche of securities certified by the Climate Bonds Initiative, providing investors with a clear demonstration of the credit performance of the underlying assets.

The FlexiGroup green tranche achieved a relatively better price than the comparable uncertified tranche, which the CEFC hopes will encourage other issuers to include similar tranches in their securitisations in the future.

Looking to the future

The CEFC has identified climate bonds as an important source of investment growth for Australia’s clean energy sector as it expands to meet the requirements of the RET. Additional finance is also needed to capitalise on growing investment opportunities supporting energy efficiency and lower emissions technologies, including in Australia’s built environment.

The FlexiGroup bond represents a significant innovation in the engagement of the capital markets with the renewables sector and demonstrates increased capacity for financial markets to support the further origination of small-scale renewable assets such as solar and battery storage.

Institutional investors who have reduced their exposure to the fossil fuel sector are looking for new investment opportunities linked to clean energy, such as climate bonds.

Australia already has one of the highest rates of rooftop solar density and a diverse asset backed securitisation (ABS) market. There is enormous potential for this green ABS to be the first of many. By gaining Climate Bonds Certification, FlexiGroup has assured investors of the green credentials of this bond and set a best practice example for future domestic issuers. Climate Bonds Initiative CEO
Sean Kidney