Social bonds raise funds for projects that support a social good or social purpose.
By issuing social bonds, NHFIC provides community housing providers with longer-tenor and lower-interest loans, attracting investment and ensuring the sustainable growth of the sector. Social bonds also help our community housing partners better provide social and affordable housing for their tenants.
NHFIC is one of the largest issuers of social bonds in Australia. As at 30 June 2021, NHFIC social bonds account for more than one quarter of all AUD social bonds.
Our bonds are measured against a sustainability bond framework and are independently assured both pre-issuance and post-issuance.
The NHFIC's Sustainability Bond Framework aligns to the UN Sustainable Development Goals and International Capital Market Association's Social Bond Principles.
How we work
NHFIC uses a bond aggregator model to issue social and sustainability bonds in the capital market. The proceeds of a social bond issuance are used to provide loans to registered community housing providers (CHPs).
This model enables NHFIC to provide concessional funding arrangements to CHPs by providing lower-cost and longer-term finance solutions compared to traditional sources of funding. The issuance of social bonds also facilitates greater private and institutional investment in the sector.
The Affordable Housing Bond Aggregator (AHBA) uses this ‘pass-through’ model to provide greater funding certainty and lower finance costs to CHPs. This assists CHPs to expand their operations and the supply of affordable housing.
To support the AHBA, the Australian Government has provided a $1 billion line of credit that NHFIC may use to advance initial loans to CHPs prior to issuing bonds. Loans financed by the line of credit will subsequently be refinanced by NHFIC issuing a social bond when a critical mass of such loans have been advanced.
The bond aggregator model has international precedent. It is currently used in countries such as the UK where it operates as a tried, tested and successful means of providing efficient finance for social and affordable housing.
Investors have the opportunity, through the purchase of social bonds issued by NHFIC, to combat the significant and prevailing funding gap in Australia’s community housing sector.
For any bond or investor related questions, please emailbonds@nhfic.gov.au
