It’s a World First For Water Bonds
The San Francisco Public Utilities Commission (SFPUC) has become the first organisation to issue a green bond certified under the Climate Bonds Water Criteria.
The certifed bond was issued for USD 240m with tenors ranging from 7 – 30 years and coupons of 4% and 5%. Moody’s and S&P rated it as Aa3 and AA respectively.
International research and analysis firm Sustainalytics has provided third-party verification that the SFPUC bond conforms with the Climate Bonds Standard.
SFPUC is the third largest municipal utility in California. Proceeds from the USD 240m Waste Water Revenue Bonds will fund eligible sustainable storm water management and wastewater projects from Phase 1 of the utility’s Sewer System Improvement Program (SSIP).
Boost for Sustainable Water Investment
The Climate Bonds Water Criteria have been created to provide investors with verifiable, science-based criteria for evaluating bonds earmarked for financing sustainable water infrastructure projects.
These criteria focus on vulnerability assessment, climate mitigation and adaptation planning in projects as diverse as energy or industrial water efficiency through to large-scale water infrastructure development.
They will help corporate, municipal and other bond issuers expand their fixed income green bond offerings in water-related projects.
Who developed the Water Criteria?
Climate Bonds Initiative, in partnership with Ceres, the Alliance for Global Water Adaptation (AGWA), CDP and the World Resources Institute (WRI), facilitated the development of the Water Climate Bonds Criteria.
A Technical Working Group consisting of academics and industry experts drafted the criteria, which then underwent public consultation.
Who’s saying what?
Harlan L. Kelly, Jr., General Manager, SFPUC:
“Climate Bonds Certification for this wastewater bond, a US and global first, is an important evolutionary step for green infrastructure financing. Our City’s sewer system was built to last a hundred years; it’s only fitting that we use the latest, most innovative financing techniques to ensure our infrastructure can overcome future environmental challenges while meeting the needs of our community for the next 100 years.”
Sean Kidney, CEO, Climate Bonds Initiative:
“Having a prominent public authority like SFPUC issue the first water bond certified against the Climate Bonds Standard is a tremendous vote of confidence. It’s a public demonstration that the Standard provides verifiable, science-based criteria for evaluating water-related bonds that are relevant and applicable for the international bond market.”
Mindy Lubber, President, Ceres:
"Water-related projects are a key subset of the green bond market and San Francisco’s leadership in issuing the first certified green water bond is a historic step in advancing this nascent but important market to finance sustainable water infrastructure.”
“Water infrastructure is vastly underfunded and it’s especially so with sustainable water infrastructure that is more important than ever due to climate change. Enacting this standard will be extremely helpful in catalysing credible growth in this hugely important market.”
California State Treasurer John Chiang:
“I am working to grow the green bond market in California and the United States. There is great demand for environmentally related securities. Unfortunately, the supply remains tight, limiting our ability to finance critical projects for combating climate change. The San Francisco Public Utilities Commission waste water green bonds, which have been certified as meeting the “Climate Bonds Standard,” are a step toward meeting this market need,”
Third US Municipal Climate Certified Bond for 2016
New York’s giant Metropolitan Transit Authority (MTA) issued its first Certified Climate Bond for low carbon transport in February 2016, a USD 782m issuance.
It is currently issuing its second Certified Climate Bond for USD 500bn.
The SFPUC Water Bond will be the third Climate Certified Bond issued in the US municipal space in the last 4 months.
The Last Word
Justine Leigh-Bell, Senior Standards Manager, Climate Bonds Initiative:
“SFPUC are leading by example with this certified bond issuance; they open a path for other public authorities to issue Certified Climate Bonds for water projects.”
“Second opinions, external verification and certification of bonds are all emerging as key assurance measures that investors increasingly value. First MTA in Transport and now SFPUC in Water are providing best practice directions for the US municipal green bond market.”
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