Third green issuance from California mass transit operator: Certification under Low Carbon Transport Criteria
Bay Area Rapid Transport (BART) opens access to its latest green bond offering to retail investors on Monday next week, with institutional investors expected to follow later in the week, according to a statement issued by the San Francisco based mass transit operator.
In a continuation of their highly successful 2017 campaign under the “Be Climate Smart – Invest In BART” label, preference is being given to residents of the counties of Alameda and Contra Costa, and the City and County of San Francisco, all core Bay Area commuter catchment zones.
Offering green bonds to retail investors using a climate message was pioneered by the New York MTA in February 2016 with their "Invest in the Planet-Invest in the MTA" campaign, highlighting an opportunity to invest in their inaugural green issuance to New Yorkers residents and commuters.
BART estimates the final offering will be approximately USD674m with the Preliminary Official Statement (POS) declaring that proceeds will go to financing or refinancing projects under the Earthquake Safety Program and to finance continued work on BART’s core infrastructure through improvements to network infrastructure including track, tunnel and system upgrades.
Morgan Stanley, Citigroup and Siebert Cisneros Shank have been mandated as lead managers. JP Morgan, Stifel, Backstrom McCarley Berry and Raymond James are co-managers.
Similar to other major urban transit operators including SNCF Réseau, Société du Grand Paris, Japans’ JRTT and the NY MTA, BART has adopted Climate Bonds streamlined Programmatic Certification route, designed to suit issuers with large asset pools and plans for multiple green bond issuances.
Climate Bonds relied upon First Environment’s verification reports to provide Certification under the Programmatic route for BART’s general obligation bond programs.
Background on BART
BART is the fifth busiest heavy rail rapid transit system in the US with system ridership totaling over 120 million passengers in the 2018 financial year.
The Preliminary Official Statement also notes the following:
- 135,472 gallons of gasoline saved from all riders for one typical weekday;
- 2,652,161 pounds of carbon dioxide emissions avoided from automobiles otherwise used by riders for one typical weekday;
- The vast majority of BART trains are 100% electric, with the exception of BART’s new Antioch Extension (“eBART”) commissioned in May 2018, which relies on renewable diesel as a propulsion fuel;
- In 2018 approximately 98% of such electric power comes from low- and zero-carbon sources, including photovoltaic solar and hydroelectric facilities.
Greening the US Muni Market
The latest offering comes as California increases the tempo of activity around green finance.
New California State Treasurer Fiona Ma has picked up where her predecessor John Chiang left off. In mid 2018 Chiang, a strong advocate for green finance and infrastructure investment, signed the Green Bond Pledge in the lead up to the September 2018 Global Climate Action Summit (GCAS) in San Francisco.
Treasurer Ma has now formed a high powered California Green Bond Market Development Committee (which includes Climate Bonds US representative Mike Paparian) with the stated aim of ‘establishing California as a world green bond leader.’
The Last Word – Golden State first to reach USD10bn in Muni Green?
California was the first state to reach USD5bn in November 2017 and as of today, cumulative green muni issuance sits at USD9.1bn, with NY close behind at a cumulative USD8.7bn and Massachusetts in third place with USD3.1bn.
As of June 30th, USD1.1bn in muni green bonds have been issued for 2019 in California, not far behind the 2018 annual total of USD1.5bn.
New York State sits in second with USD822m for the first half of 2019, already in sight of their 2018 annual total of USD835m.
Another USD674m from BART, on top of the existing USD9.1bn, will have the Golden State well on track to be first to reach the big USD10bn green muni milestone.
Unless NY makes a late surge….
We’ll keep you advised.
‘Till next time,
|Want to know more about who’s issuing green rail bonds? Here are some of our recent Blog Posts|
|Jul '19||Market Blog #29 - 11/7/19: Ferrovie dello Stato 1st Italian Certified Climate Bond: Rolling stock upgrades|
|Jun '19||New green rail bonds: Russia, Thailand, Japan, France, USA: Network expansions, fast trains & new rolling stock|
|Feb '19||Japan: JRTT Inaugural CBI Certified Green Bond: Fast train network operator goes to market with new green offering|
|Dec '18||Société du Grand Paris Adopts Programmatic Path: Streamlined Certification for Giant Rail Project|