April 2016

Green Bond for Refinancing Rooftop Solar

FlexiGroup Ltd has issued a $50 million green bond for the refinancing of residential rooftop solar PV systems. The asset backed securities (ABS) have received certification against the international Climate Bonds Solar Standard.

The FlexiGroup Green ABS Notes were issued as part of a term securitization transaction for the Flexi ABS Trust within a wider collateral pool of $260 million of consumer receivables. The bonds are supported by a pool of Australian unsecured, retail, "no interest ever" payment plans originated by Certegy Ezi-Pay Pty Ltd, a subsidiary of FlexiGroup.

Symon Brewis-Weston, FlexiGroup chief executive officer said "We are very excited by the innovation shown in this latest transaction. Solar funding has represented a significant portion of the Certegy business for several years and is one of our strongest industries. In offering the Class A2-G note, FlexiGroup has given new and existing investors the opportunity to directly support environmentally sustainable industries."

FlexiGroup says the issue is the first Australian green labeled ABS, and the first Climate Bonds Certified Australian ABS.

National Australia Bank (NAB) was the arranger and green bond structuring agent for the issue. Verification was Norway based DNV.GL. The transaction was arranged by NAB and joint lead managed by the Commonwealth Bank and NAB.

Steve Lambert, NAB executive general manager, Capital Financing, said NAB is Australia's leading debt financier of renewable energy and was excited to extend its securitization capability by arranging what is both a world first Climate Bond certified securitized green bond, and Australia's first securitized Green Bond.

"NAB recognizes that environmental challenges such as climate change, resource scarcity and natural capital loss and degradation are challenges that affect our economy and society. This landmark transaction offers yet another option for investors and the emerging impact investment market in Australia," he said.

The Clean Energy Finance Corporation (CEFC) invested $20 million in the green bond. Chief executive, Oliver Yates said "This transaction is a significant milestone in the development of the Australian green bond market. Institutional investors who have reduced their exposure to the fossil fuel sector are looking for new investment avenues linked to clean energy. Green bonds can provide solid returns for investors wanting to contribute to positive climate change solutions. Other issuers can attract green investment support by also identifying and separating investment opportunities related to clean energy assets."

Sean Kidney, chief executive of Climate Bonds Initiative, said "Australia already has one of the highest rates of rooftop solar density and a diverse 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."

FlexiGroup is an ASX-200 listed financial services group. It operates in Australia, New Zealand and Ireland. It partners with retailers such as Harvey Norman, IKEA and AGL Solar to offer finance to retail and business customers. Certegy has financed about 120,000 consumer solar installations, about 8 per cent of the Australian installed base.





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