September's $4 billion two-tranche bond from the Mexico City Airport Trust was the biggest corporate green bond to come to market and double the size of the company's inaugural green issue in 2016.
Issuer: Mexico City Airport Trust
Size: $4 billion
Maturity: 30 April 2028 ($1 billion) and 31 July 2047 ($3 billion)
Coupon: 3.875% (2028 maturity); 5.5% (2047 maturity)
Use of proceeds: Sustainable buildings, renewable energy, energy efficiency, water and wastewater management, pollution prevention and control, conservation and biodiversity.
Credit rating: Baa1 (Moody's), BBB+ (S&P), BBB+ (Fitch)
Lead managers: BBVA, Citigroup, HSBC, JP Morgan, Santander
Other managers: Crédit Agricole CIB, Inversora Bursátil, S.A. de C.V., Casa de Bolsa, Grupo Financiero, MUFG Securities, Scotia Capital
External review: Sustainalytics, Moody's, S&P
About $5.6 billion of the combined $6 billion proceeds from the bonds is earmarked for green buildings, with $188 million for energy efficiency projects, about $22 million for solar power generation, and the remainder for water treatment and conservation.
The developer's aim is to build the world's most sustainable airport, and is planning for it to qualify for LEED platinum certification. It plans to power the development wholly from renewable sources of energy while cutting water consumption by 30% and energy consumption by 40% compared with the existing airport. It claims it will also help prevent local flooding.
S&P gave the bonds an overall score of E1/77, which is at the top of its 'Green Evaluation' scale of E1 to E4.
"In our view, the project's favourable positive impact on energy and emissions savings, as well as the strong governance framework and transparent reporting mechanisms, positions it at the top end of our scale," the agency says.
"The new build consists of multiple technologies that sit at the top of our carbon hierarchy, contributing to an above-average mitigation score," said S&P analyst Candela Macchi.
Moody's Investors Service is also enthusiastic. It has assigned both the 2017 and 2016 bonds a Green Bond Assessment of GB1 (excellent).
Sustainalytics, while acknowledging the impact on greenhouse gas emissions of extra flights and additional road traffic arising from the larger airport, confirmed that the underlying green bond framework aligns with the Green Bond Principles.
The September transaction was well received by investors, as it was only the fifth green bond deal from a Mexican issuer and came just three months after local insurers, pension funds, and development banks appealed for more action to develop the local green bond market.