Environmental Finance's Bond Awards 2023

Green bond of the year - sovereign: Government of Canada

The Government of Canada's inaugural, 7.5-year C$5 billion ($3.6 billion) green bond, in March 2022, is the largest single green bond offering denominated in Canadian dollars to date.

The transaction was met with strong investor interest, with 102 investors participating, and was more than two-times over-subscribed. 72% of the group were ESG investors and final pricing on the transaction was 2 basis points (bps) tighter than initial pricing expectations, according to the Department of Finance for Canada.

The final order book was in excess of C$11 billion and represents the largest Canadian dollar-denominated green bond order book on record in Canadian markets.

Proceeds of the bond will be allocated to expenditures that meet any of the environmental eligibility criteria set out in Canada's Green Bond Framework (known as Eligible Green Expenditures).

The Canadian government is considering updating its sustainable bond offerings, including the addition of social and transition use-of-proceeds categories to allow a greater breadth of potential bond offerings in the future.

In addition to committing to publish an annual impact report, Canada intends to report on social co-benefits and impacts on a variety of social metrics, including for Indigenous communities, where available.

One Environmental Finance Bond Awards judge commented: "[Canada] demonstrates continued support for the green bond market. The issuance has broad based use of proceeds, aligned with the Sustainable Development Goals and is supported by strong impact reporting."

Another said: "What an impressive strong statement by the government of Canada, well reflecting the country's leadership in the global sustainability community."

The Government of Canada plans to be a regular issuer of green bonds.

Deal highlights:

Issuer: Government of Canada
Size: C$5 billion ($3.6 billion)
Maturity: December 2029
Coupon: 2.25%
Use of proceeds: Clean transportation, climate change adaptation, eco-efficient products, production technologies and processes, energy efficiency, pollution prevention and control, renewable energy, sustainable management of living natural resources, sustainable water management, terrestrial and aquatic biodiversity conservation
External reviewer: Sustainalytics
Lead managers: Bank of Montreal Capital Markets, CIBC Capital Markets, HSBC Canada, RBC Capital Markets, Scotiabank, TD Securities
Credit Rating: AAA (S&P, Moody's, DBRS, AA+ (Fitch)