GB Market Rpt: Water, water everywhere! Cleveland $32.4m, Saint Paul $7.7m, Indiana $115.8m, Columbia Uni $50m, California $411m, Massachusetts Water $682m! US municipal green bonds issuance is dominated by water.

There's been so much going on in the green bond space over the past couple of weeks that we have split the normal market report. Corporates were yesterday, here's the Municipal Report and Developlemt Banks and the remainder will be later this week. Keep an eye out.


Municipal Green Bonds

City of Cleveland issues inaugural $32.4m green bond for wastewater management (3% to 5%, 1yr - 20yrs, A+)

City of Cleveland issued its first green bond of $32.4m, with maturities spanning from 1 year to 20 years and corresponding coupons ranging from 3% to 5%. The bond was rated Aa3 (Moody’s) and A+ (S&P). Morgan Stanley acted as the lead book runner.

The proceeds will go to wastewater management projects in the following two categories:

  • Stormwater Projects: stream channel restoration, removal of shoaling and woody growth, constructing and repairing catch basins and manholes. The Euclid Creek Flood Control project is listed as a potential specific project to be funded by the green bond.
  • Sewer Projects: repairing and installing sewers, rehabilitating sewer service connections, replacing sewer lines to prevent flooding and illicit discharges; investing in equipment, professional services, and information technology.

City of Cleveland made its green bond debut without getting a second party review or certification of the green credentials, but we’re happy to see they do commit to an annual update on the use of proceeds and projects funded by the green bond on its website.

We hope that the annual update will include more details around climate adaptation and mitigation for the wastewater projects, as ensuring water projects take climate change into account is an important aspect of the projects’ environmental credentials.

For the  next issuance, it would be good to have more details around adaptation and mitigation  at the time of issuance, and a review of the green credentials of the bond from an independent party.


City of Saint Paul’s $7.7m green bond is issued for sustainable water (2% to 5%, 1yr - 19yrs, AAA)

City of Saint Paul issued a  green bond of $7.7m, with maturities ranging from 1 year to 19 years, coupons from 2% to 5% and AAA-rating from S&P. Stifel was the sole book runner for the deal. This is the second green bond from the City of Saint Paul, their first $8.7m green bond issued in 2015, was also for water.

The proceeds will be used for clean water and sustainable water management through improving the City’s Sewer System. Saint Paul commits to tracking and reporting the use of the proceeds and will post to the Electronic Municipal Market Access System (EMMA), an official website for information on US muni bonds, an annual update regarding nominated projects until the proceeds are fully expended, following the Green Bond Principles.

City of Saint Paul did not obtain a second review or certification to endorse the green credentials of the bond. While it’s great to see reporting plans are in place for the full bond term, we would prefer to have more details of the environmental credentials of the water projects at issuance – for example, do the projects factor in climate change adaptation and mitigation?

Given the long operating life of water infrastructure, it’s crucial  consideration for water projects to consider, and information of interest to green bond investors.

Hopefully the annual updates will provide some more information on the climate credentials of the  developments that are being funded by the green bond – we are looking forward to seeing the first report!


Indiana Finance Authority issues $115.8m green bond for Wastewater and Drinking Water projects (4% and 5%, 1yr - 20yrs, AAA)

Indiana Finance Authority issued a  green bond of $115.8m, with maturities from 1 year to 20 years, coupons of 4% and 5%, rated Aaa (Moody’s), AAA (Fitch), and AAA (S&P). Bank of America Merrill Lynch and Goldman Sachs acted as joint-lead book runners.

Proceeds of the bond will be used for water projects that improve the quality of drinking water and reduce pollution in the water supply sufficiently to meet state and federal water standards (the Water Quality Act, the Safe Drinking Water Act and Federal Environmental Law).

Indiana Finance Authority did not seek a second party review or certification on the green credentials of the bond, but they will report annually on the selection of projects as under The Federal Environmental Law, the Finance Authority is required to prepare an annual Intended Use Plan to selected projects on the basis of environmental and public health significance.

We hope the annual reporting will shed some light on the climate change credentials of the bond; as with the bonds from Cleveland and St Paul, information on climate adaptation and mitigation plans is needed.


Dormitory Authority of the State of New York Columbia University joins the green bond market with a $50m issuance (4% and 5%, 10yrs, AAA)

Dormitory Authority of the State of New York Columbia University made its green debut earlier in the month with a $50m green bond, which was part of a larger $389.7 deal. This issuance consists of two tranches both with 10-year maturity, respective coupons of 4% and 5%, rated AAA (S&P) and Aaa (Moody’s). Goldman Sachs acted as the lead underwriter.

The proceeds will be used to fund the construction of a new science building and the University is aiming to earn a LEED certification for the building. One of the planned sustainable building features include chilled beam technology for reducing mechanical cooling and heating requirements, which in turn will improve the emissions performance of the building. The Dormitory Authority did not obtain  a second party review or certification of the green bond.

It would be great to know which level of LEED certification the building is expected to achieve, as well as more information on the expected level of emission performance the building, as the LEED rating methodology also includes a range of other non-emission related factors.

Other campus buildings have received LEED Platinum ratings, the highest level, which is promising. Hopefully more disclosure will be available in the first annual report of the bond: The use of proceeds will be tracked and reported annually on EMMA till the full expense of the proceeds. We hope emissions performance will be included in the first annual report.

Welcome to the market Columbia!


California Infrastructure and Economic Development Bank’s inaugural $411m green bond (2% to 5%, 1 to 19 yrs, AAA)

California Infrastructure and Economic Development Bank dropped in the green bond market for the first time with an issuance of $411m. This issuance is split into nineteen tranches with tenors spanning between 1 year and 19 years, coupons from 2% to 5%, rated AAA (S&P) and Aaa (Moody’s), and Morgan Stanley as the lead underwriter.

Proceeds will be used for 34 wastewater and clean water projects across the state, aiming to meet criteria set out by the United States Environmental Protection Agency.

Great to see details of all the nominated projects disclosed in the prospectus, such as fund allocation and project description, although we’d like to also see information about the green credentials of the projects, especially around climate change mitigation and adaptation.

In California, water infrastructure accounts for a significant portion of energy use, and droughts are increasingly stressing the water system.

California did not pursue a second party review or certification on this green bond.

We are expecting to see more green bond issuances for water projects coming out of the Golden State, as it is reported to be facing a backlog of about $29 billion in needed wastewater infrastructure projects and $36 billion in drinking water projects.


Massachusetts Water Resources Authority issues first-time $682m green bond for water (3% to 5%, 1 to 23 yrs, AA+)

Massachusetts Water Resources Authority entered into the green bond market with a $682m issuance, consisting of nineteen tranches with tenors spanning between 1 year and 23 years, coupons from 3% to 5%. This issuance was rated AA+ (S&P), AA+ (Fitch), and Aa (Moody’s), with Citi as the lead underwriter.

Proceeds will be used to fund wastewater and waterworks projects, in the following. sub-categories: Construction of trunk and relief sewers, pump stations, wastewater treatment facilities, combined sewer overflows are included in the wastewater category; construction of drinking water quality improvement facilities, water transmission, distribution, and pumping systems fall under the waterworks category.

No clear commitments for reporting on the bond throughout the bond term was made, and similar to the other US recent municipal issuances, Massachusetts Water Resources Authority did not seek a second review or certification, or provided disclosure on climate adaptation and mitigation.

We would like to see reporting on the use of proceeds and environmental impact.

Up till now, there have been 59 individual US muni issuances in the market with 6 supported by second reviews and only the $780m MTA bond was certified under Climate Bonds Standard.  (check out the MTA green bond video)



Swindon Council Solar Bond has raised £1.4m with £380k left before reaching financial close

As mentioned in an earlier blog this is the first UK council solar bond, and it will be used to fund a 4.8MW ground-mounted solar farm near Swindon. We will report more details once the bond closes.

Till next time,

The markets team.



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