ANZ on February 15 priced its first sustainable development goals (SDG) bond in the European wholesale debt capital markets, raising 750 million euro (US$937.50 million) to fund its loans and expenditures that directly promote nine of the United Nations’ 17 SDGs.

The five-year fixed rate bond was priced at a spread of 15bp over the swap rate with a yield of 0.643%. It was primarily distributed to European institutional investors.

The bond is the first euro SDG offering globally and provides an innovative form of funding while driving a deeper and more liquid market for social responsible investments, says ANZ head of sustainable finance Katharine Tapley.

The proceeds are intended to support projects offering broad social, economic and environmental benefits, including funding for hospitals, schools, green buildings, clean water, public transport system or renewable power plants.

In executing the bond deal, ANZ head of group funding Mostyn Kau says the bank is responding to growing fixed income investor interest in using the SDGs as an impact measurement for their portfolios. “The strong demand for this transaction highlights the growing number of sustainable mandates within the institutional investment community – we expect this trend to continue,” he adds.

ANZ, Barclays, BNP Paribas and HSBC were the joint bookrunners for the transaction.

ANZ is committed to sustainable financing, having issued its inaugural A$600 million (US$476.20 million) green bond in 2015, which at that time was the largest climate-related bond by an Australian issuer. Since then, ANZ CEO Shayne Elliott became a signatory of the CEO Statement of Support for the SDGs in 2016.

ANZ recently increased its commitment to fund and facilitate low carbon and sustainable solutions, raising its original target of US$10 billion by 2020, to at least US$15 billion by the same year.

The SDGs are a collection of 17 global goals adopted by the UN and cover a broad range of social and economic development issues. These include poverty, hunger, health, education, climate change, gender equality, water, sanitation, energy, environment and social justice.

In November 2017, HSBC issued what was described as the world’s first corporate sustainable development bond amounting to US$1 billion with the proceeds to be used to offer broad social, economic and environmental benefits as aligned to seven selected UN SDG targets. The offering generated a strong appetite from North America, which took 80% of the allocation, while Asia accounted for 10% and Europe 9%.

ANZ has developed a SDG bond framework in accordance with which it intends to issue SDG bonds. The bank engaged Sustainalytics to provide a second party opinion on its framework and on the framework’s environmental and social credentials.

Overall, Sustainalytics is of the opinion that the ANZ SDG bond framework creates meaningful impact. It is transparent, credible and aligns with the Green Bond Principles 2017, the Social Bond Principles 2017 and the Sustainability Bond Guidelines 2017.

ANZ has a dedicated green bond working group, which bears responsibility for the final decisions on project selection and evaluation, aligned with market practices.