Socially responsible bond issuance

 

Cbus has participated in the first bond issuance by the National Housing Finance and Investment Corporation (NHFIC), with the proceeds going towards increasing supply and reducing the overall cost of affordable community housing. The repayments on the bonds are guaranteed by the Government which helps the bonds to receive a AAA credit rating, the highest possible credit rating a bond can receive. The high credit rating on the affordable housing bonds allows the NHFIC to be able to borrow money at a significantly lower interest rate than the community housing industry can typically borrow, and only slightly higher than the rate at which the Australian Government borrows money.

The Government guarantee on the bonds has the effect of providing investors a similarly low level of risk, yet a higher return than if they were instead to invest directly in Government bonds. The higher return relative to Government bonds, as well as the socially responsible aspect of the raising has meant that despite this being the largest social bond issuance in Australia, demand for the bonds was four times higher than the amount on offer.

Investors such as Cbus have shown the NHFIC that there is real demand for this type of investment that helps society, as well as provides a low risk, sustainable return for our members.