US municipalities launch $800m of green bonds for water projects

Channels: Debt, Green Bonds

Companies: Massachusetts Water Resources Authority, Citigroup, Barclays, Bank of America Merrill Lynch, JP Morgan, Morgan Stanley, Goldman Sachs, Jefferies, Ramirez, RBC Capital Markets, Wells Fargo Securities, San Diego County, Backstrom McCarley Berry, BOSC, Piper Jaffray, Stifel, New Jersey Environmental Infrastructure Trust

Three US municipalities have announced issues of green bonds totalling almost $800 million to finance projects to deliver clean drinking water or treat wastewater.

By far the biggest is a $681.615 million issue from the Massachusetts Water Resources Authority. This issue had been dramatically increased in size from initial plans of $348 million, which was raised to $450 million in March. (LINK)

The issue comprises 19 tranches, with maturities ranging from 2017 to 2040 and coupons varying between 3.00% and 5.00%. Underwriters of the issue are: Citigroup, Barclays, Bank of America Merrill Lynch, JP Morgan, Morgan Stanley, Goldman Sachs, Jefferies, Ramirez, RBC Capital Markets and Wells Fargo Securities.

Projects to be financed by the bonds will comply with the standards of the US Clean Water Act and the Safe Drinking Water Act, the issuer said. But investors in the bonds "will not assume any specific risk with respect to any of the funded projects."

 

The Authority is responsible for providing water and sewerage services to some 2.8 million people in the state of Massachusetts, including most of the Boston area.

Meanwhile, San Diego County's Water Authority plans to issue $98.545 million of green bonds to refund some of its other outstanding debt.

The new issue comprises four tranches, with maturities ranging from 2030 to 2033.

The proceeds of the 2008A 'certificates of participation' that will be refunded were used to finance certain "environmentally beneficial" projects and construction of these projects has now been completed, the issuer said.

The managers for the green bond issue will be Citigroup, RBC Capital Markets, Backstrom McCarley Berry, BOSC, Piper Jaffray and Stifel.

The third municipal issuer to come to market in recent days was the New Jersey Environmental Infrastructure Trust, which announced its intention to issue $23.925 million to help finance various improvements to "the quality of wastewater treatment systems and drinking water supply systems."

Bank of America Merrill Lynch is the sole lead manager for this issue.

Graham Cooper