A kangaroo bond, sometimes known as a matilda bond, is a foreign bond issued in the Australian market by non-Australian firms denominated in Australian currency. AfDB social bonds raise money for projects that alleviate or mitigate social issues such as improving access to electricity, water and sanitation. The transaction, led by Nomura and RBC Capital Markets, marks the largest Australian dollar trade issued by the institution. More than 30 investors participated in the deal, with a total order book of over A$775m, leading to the trade being ‘upsized’ from an initially announced A$250-300m to its final size of A$600m. Buyers included a “strong cohort” of Australian investors, according to the bank, as well as strong representation from fund managers. The bank says it intends to issue more social bonds in Australian dollars.
The Australian dollar is the fifth currency in which the AfDB has issued social bonds since it established the program in 2017, following deals in euros, US dollars, Norwegian kroner and Swedish kronor. It launched its first Australian bond in 2016. Following on from the ground breaking USD$3.1 bln 3 year ‘Fight Covid-19’ Social Bond issued in 2020, public domestic markets, like the Kangaroo bond market, are now seeing similar development in terms of interest from dedicated ESG investors, which provided additional momentum enabling us to print the largest trade ever done in AUD.