British Columbia CAD231.5m (USD218m), 32yr, A- green bond issued to fund sustainable hospitals. Criteria: LEED Gold+ASHRAE 90.1 mandated by BC Climate Action Plan. Nicely done Victoria!

A long-tenor - 32 year - CAD 231.5 million (USD 218 million) green bond was successfully issued this week to fund the building of two new hospitals in Campbell River and the Comox Valley of British Columbia.

The A- bond was over-subscribed, according to the BC Government’s media release.

Underwriters were National Bank Financial and Bank of Nova Scotia. The bond yield is 165 basis points more than a government benchmark security. Investors included insurance companies and fund managers.

British Columbia typically funds infrastructure by tendering out long-term lease style contracts and getting the project developers to raise the capital. BC Minister of Finance, Michael de Jong, says that BC funds “public infrastructure in a way that provides an attractive market for business, while protecting taxpayers from cost overruns or scheduling delays”.

The issuer was Tandem Health Partners, a consortium of private investors led by Balfour Beatty, and the project is called the North Island Hospitals Project. Total project budget is $606.2-million. Construction will begin in 2017.

The bond is the first green bond to fund public-private partnership in North America and more importantly the first green bond issued to finance public infrastructure in Canada. It marks the growth of the green bonds market in Canada that has already seen two green bonds issuances this year: from Export Development Canada and TD Bank.

A “second opinion” assessing the bond’s greenness was provided by Altus Group, a technical advisor for public- and private-sector infrastructure projects. Onging review will be done by existing government compliance teams.

Altus were not determining “what is green”, but were simply confirming that the qualifying criteria set by the BC Government under their pioneering BC Climate Action Plan were met: buildings have to both achieve LEED Gold certification and meet energy and greenhouse gas targets in the American Society of Heating, Refrigeration and Air-Conditioning Engineers 90.1 (2004) standard (ASHRAE 90.1) – that means the bond is in synch with the new Climate Bonds Green Property criteria. You may recall that we mentioned some weeks ago ASHRAE 90.1 is the measure we would have liked the Regency bond to meet.

The BC Climate Action Plan was launched by the province’s government in 2008 with aggressive emission reduction targets of 33% from 2007 levels by 2020 and 80% by 2050.  

BTW, BC has also passed the Greenhouse Gas Reduction Targets Act (80 per cent below 2007 level by 2050) as well as the Carbon Tax Act that has put a price on greenhouse gas emissions and provided an incentive for sustainable choices that produce fewer emissions.

Bravo British Columbia!!

(BTW, Victoria is the capital of British Columbia. Just in case you were wondering about the headline.)