Auckland Council will open a $200 million green bond offer next week, which it says will be used to buy more electric trains and equipment and refinance existing debt from electric trains.
Green bonds are created to fund projects that have environmental or climate benefits, and Auckland Council is the first in New Zealand to offer them. The bonds are expected to be assigned a long-term credit rating of AA from Standard & Poor's and Aa2 from Moody's.
The offer is for up to $150m with $50mn in oversubscriptions for five-year unsubordinated fixed-rate bonds, available to investors in New Zealand and some offshore jurisdictions, the council said.
There is no public pool, with the bonds reserved for clients of ANZ, BNZ, Westpac Bank and other institutions and approved participants.
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The council said it would announce the indicative margin on the bonds on Monday, when the bond offer opens.
Its last bond offering, in July 2016, was a 10-year bond with an indicative margin of 0.9 per cent per annum over the comparable benchmark. The five-year swap rate was recently at 2.7 per cent.
"By adopting sustainable policies and enhancing our environment we also have the opportunity to create an attractive investment opportunity for investors who are allocating larger segments of their portfolios to green investment activities," finance and performance committee chair and councillor Ross Clow said.
"It makes sense to leverage the strong investor demand for green bonds to assist us with funding projects with environmental benefits."