MTR Corp raises record A$2 billion in first Australian dollar green bond sale

Hong Kong’s rail giant has sold its first-ever Australian dollar-denominated green bonds for a record A$2 billion (US$1.4 billion) to fund environmentally friendly projects, marking the country’s largest order book. The bonds, issued in two equal tranches, were oversubscribed more than sixfold by a variety of investors, the MTR Corporation said on Tuesday. The offering represented the largest-ever Australian dollar corporate green bond and the largest dual-tranche corporate bond in the market. It was also the biggest corporate order book ever achieved in the country’s currency. “The issuance of our inaugural Australian dollar green bonds is the next step in our efforts to maintain a highly diversified funding base to drive business growth,” MTR finance director Michael Fitzgerald said. “We are delighted with the very positive response from investors, including insurance companies, official institutions, pension funds, sovereign wealth funds, asset managers, banks, securities houses and private banks from around the world.” He added the proceeds would further strengthen the corporation’s financial foundation and enhance its flexibility to support the capital investment programme, which will enable it to build more vibrant communities and uphold service excellence. An MTR spokesman said the bonds were issued in a dual-tranche transaction comprising a five-year tranche of A$1 billion and a 12-year tranche of A$1 billion, with coupon rates set at 4.886 per cent and 5.582 per cent, respectively. He added that strong demand led to an oversubscription of 6.25 times, with a combined final order book of A$12.5 billion, and that the positive market response underscored investor confidence in the corporation’s commitment to sustainability. ANZ, Deutsche Bank, MUFG and UBS acted as joint lead managers and joint bookrunners for the debt issuance, with ANZ appointed as the coordinator for environmental, social and governance (ESG) initiatives. The MTR Corp has had a presence in Australia since 2009 and currently operates major rail franchises and metro systems in Melbourne and Sydney. Last year, MTR secured a landmark HK$30 billion (US$3.86 billion) seven-year syndicated green term loan with the support of 57 banks worldwide in September, as well as a public bond issue that raised US$3 billion from a three-tranche offering amid a hot credit market in Asia in March. In July, the rail giant and the Hong Kong government signed an agreement on the design and construction of a major rail link in the Northern Metropolis, fast-tracking its completion by at least two years to 2034. The agreement, which gives fresh momentum to the Northern Metropolis project, involves HK$39.05 billion in financing from land premiums for the construction of three stations along the Northern Link main line, as well as the design of the spur line, tunnels and other railway facilities. It is the first part of a two-stage deal. First announced in the 2021 policy address, the Northern Metropolis development aims to transform 30,000 hectares (74,130 acres) in the New Territories into an economic powerhouse featuring a new IT hub and a university town with high-quality living spaces.