Lead manager of the year, sustainability bonds - US muni bond; social bonds - US muni bond: Morgan Stanley

Zach Solomon

In 2020, the investment bank brought 11 sustainability bond and six social bond transactions to market in the US for municipal and not-for-profit issuers, totalling $2.1 billion and $1.6 billion respectively.

The bonds covered a diverse range of issuers and projects, such as affordable housing projects, community development financial institutions and drought resiliency projects (see Figure 1).

A noteworthy example behind Morgan Stanley's working in US muni sustainability bonds is the City of Phoenix's sustainability bond issuance. This sale occurred on 26 March 2020 during a period of coronavirus-induced financial turmoil.

Despite facing poor market conditions and a disrupted municipal bond market, Morgan Stanley attracted a 4.3x oversubscribed order book and the underwriting desk was able to tighten spreads due to investor demand.

To address the worsening drought conditions in the US Southwest region, the City raised capital to fund its Colorado River Resiliency project. The project aims to fund drought resiliency efforts that protect Phoenix residents during Colorado River shortages.

The second accolade for Morgan Stanley is for its role as lead manager of social bonds in the US muni bond category.

Morgan Stanley worked with a mix of affordable housing and not-for-profit social bond issuers in 2020 to address socioeconomic issues worsened and brought to light by the Covid-19 pandemic (see Figure 2).

When taking into consideration all the municipal sustainability and social bond deals that Morgan Stanley had a role on, whether as lead manager or as a non-lead member of the syndicate, the New York City-based investment bank participated in 83% of all municipal sustainability bond deals and 39% of all municipal and not-for-profit social bond deals in 2020.

"Morgan Stanley is very pleased to have been named lead manager of the year for both social bonds and sustainability bonds in the US muni market," commented Zachary Solomon, executive director and head of Morgan Stanley's tax-exempt project finance and sustainable infrastructure group.

"This past year brought a number of social issues to the forefront of our collective consciousness. The social and sustainability bonds we had a chance to work on sought to address those very issues in meaningful ways. In that light, the growth of the social and sustainability bond issuance this past year was a testament to the market's ability to act dynamically and create real impact. We greatly appreciate our issuer and investor clients' choosing to work with Morgan Stanley on such important transactions and projects in their respective communities."

Figure 1: Morgan Stanley 2020 US Municipal Sustainability Bonds 

Sale date IssuerState Par AmountSector
23 January 2020 Bluehub Loan Fund Massachusetts $75,000,000 CDFI 
5 February 2020 New York City Housing Development Corporation  New York $375,000,000 Housing
11 March 2020 New York City Housing Development Corporation  New York $92,915,000 Housing
26 March 2020 City of Phoenix Civic Improvement Corporation  Arizona  $228,015,000  Water/Wastewater 
21 April 2020 Metro Oregon  $90,000,000  Infrastructure 
28 May 2020 New York City Housing Development Corporation  New York  $258,830,000  Housing 
9 June 2020 State of Oregon  Oregon  $95,390,000  Housing 
9 October 2020 New York State Housing Finance Agency New York  $178,070,000 Housing 
16 October 2020 Conneticut Housing Finance Authority Conneticut $99,765,000 Housing 
1 December 2020 Bridge Housing Corporation  Multi-State  $100,000,000  Housing 
11 December 2020 New York City Housing Development Corporation  New York  $532,950,000 Housing 
   Total  $2,125,935,000  

Figure 2: Morgan Stanley 2020 US Municipal Social Bonds

Sale date Issuer State Par amount Sector 
18 June 2020 The Ford Foundation  New York  $1,000,000,000  Non-profit 
21 July 2020  Doris Duke Charitable Foundation  New York $100,000,000 Non-profit
20 August 2020 MacArthur Foundation  Illinois  $125,000,000  Non-profit 
16 September 2020 Rhode Island Housing and Mortgage Finance Corporation  Rhode Island  $126,540,000  Housing 
22 September 2020 Florida Housing Finance Corporation  Florida $125,000,000  Housing 
9 December 2020 Massachusetts Housing Finance Agency  Massachusetts $105,165,000 Housing 
  Total $1,581,705,000