Environmental Finance's Bond Awards 2022

Green bond of the year - US muni bond: Buffalo Sewer Authority

With its inaugural 'green and environmental impact bond' the Buffalo Sewer Authority (BSA) of New York raised $49.2 million through its first public market financing since 2003.

Oluwole McFoyThe bond's proceeds will be used to fund the BSA's Rain Check 2.0 projects, which are storm water management infrastructure, such as tree planting, rain gardens, permeable pavements, and underground filtration. This construction will reduce the flow of storm water into the sewer collection system and reduce the occurrence of sewage overflow events.

BSA have tied positive incentives to the performance of these environmental goals, subject to independent verification by Arcadis. If at least 200 acres of impervious surface area have green storm water infrastructure installed and managed through the implementation of the Rain Checks 2.0 project by June 2028, then BSA can refinance the bonds early at a par call price. If BSA does not successfully meet this outcome threshold by 2028, it can call the bonds at a less favourable declining premium during the three years that year.

"Our Rain Check 2.0 programme will make Buffalo a greener, healthier, and more equitable city," said Oluwole 'O.J.' McFoy, CEO and general manager of the Buffalo Sewer Authority. "This environmental impact bond illustrates our commitment to being data-driven, equitable, forward-thinking and transparent in how we address storm water and community resilience."

"This issuer was able to garner strong demand through an innovative structure that combined a green bond with a sustainability linked bond (SLB) component. The pricing levels were commensurate of this despite the smaller issuance size," commented one awards judge, while another added there was a "very strong impact reporting commitment including using a third party to calculate, verify and report".

Deal Highlights

Issuer: Buffalo Sewer Authority
Sector: Municipality
Instrument: Green bond
Issue size: $49.2m
Maturity date: 15 June 2022-36, 2049 & 2051
Settlement date: 16 June 2021
Coupon: 1.75% - 5%
Lead managers: Morgan Stanley
Use of Proceeds: Sustainable water management, green buildings, pollution prevention
External review/Second opinion: Arcadis
Credit rating: S&P (A)
Principles/Guidelines: Green Bond Principles


This was an Environmental Impact Bond with a Quantified Ventures project technical memo. Quantified Ventures was the 'outcomes-based financing advisor'.