Chapman Tripp is pleased to have advised Christchurch City Holdings Limited (CCHL) on the first sustainability bond offer in the New Zealand market to be made in reliance on a specific exemption from the Financial Markets Authority.
“The pioneering nature of the offer made it a particularly satisfying transaction on which to work”, Fiona Bennett said.
CCHL is Christchurch City Council’s investment arm and intends to notionally allocate the net proceeds of the $150m raised for projects identified with positive environmental and/or social outcomes. CCHL’s sustainable finance framework applied to this issuance of sustainability bonds.
The FMA exemption represents a major step in the New Zealand debt capital market, paving the way to remove substantial costs of entry for issuers to the sustainable bond market.
The exemption allowed CCHL to offer its first sustainability bonds to retail investors under a terms sheet, similar to the streamlined ‘same class’ offer format generally used by repeat issuers. Previously in New Zealand, existing issuers considering their first sustainability bond have needed to either prepare a full Product Disclosure Statement, substantially increasing the cost and time to issue, or retrospectively label their existing quoted bonds before the new issuance.
While retrospective labelling remains a good option for some issuers, it may not be viable if the issuer does not have a large existing pool of eligible assets to allocate to those existing quoted bonds.
We wanted to do something that reflected the “green” nature of the asset, but also acknowledged the other sustainability work and attitudes across the CCHL Group. A retrospective labelling wouldn’t have worked well for us, and doing a new Product Disclosure Statement wasn’t practical, so it just wouldn’t have happened without an exemption. We understood that an exemption would be a significant precedent-setting step for the FMA, so it was essential to get expert advice from the start of the process – the Chapman Tripp team have done a great job to explore & develop this with FMA, and to get our Sustainability Bond over the line.Steve Ballard, commenting on behalf of CCHL
The joint lead managers were Westpac Banking Corporation (acting through its New Zealand branch) and ANZ Bank New Zealand Limited. Westpac was also Arranger and Sustainability Bond Coordinator. The Supervisor is Public Trust.
The sustainability bonds are listed on the NZX debt market.