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Sovereigns and central banks

Pricing bonds on Australia’s 2035 NDC commitments

Written by Ulf Erlandsson

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Australia has recently published its 2035 NDC commitments. The levels suggest a fairly fast reduction of domestic GHG emissions is needed for the target to be achieved.

This article prices a transition linker structure based on those targets, using the current ACGB AUD2.75 05/2041 bond as baseline and with multiple step-ups and step-downs, linked to beating stretch targets and accelerating Australia's transition.

The structure could allow Australia to raise debt more cheaply, while providing investors with negative correlation to adverse transition scenarios.

About the author

Ulf Erlandsson

Ulf Erlandsson

Founder, Board member

Dr Ulf Erlandsson founded the Anthropocene Fixed Income Institute and was its first CEO. A pioneer of climate-focused fixed income portfolio management, he was named Environmental Finance’s Bond Personality of the Year 2022.

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