Concordia becomes first university in Canada with sustainable bonds
Concordia University has become the first Canadian university to issue a sustainable bond, riding an ethical investing wave that saw the country’s largest institutional investors more than quadruple their output in social and eco friendly bonds in 2018.
Concordia’s $25-million senior unsecured bond offers investors a 3.626-per-cent yield and has a duration of 20 years — the longest for any sustainable bond in Canada, according to Denis Cossette, the university’s chief financial officer.
The bond, issued Friday, will be used to reimburse the university of the capital it spent on financing its Science Hub, which will be home to aquatic biology, microscopy, cellular imaging and chemical and materials engineering labs for researchers.
It’s the work that will take place inside the building that allowed Concordia to issue sustainable bonds instead of green bonds, Cossette said. The former required certification assuring that the Science Hub and the work the university plans to conduct inside will contribute to three of the United Nations’ sustainable development goals: affordable and clean energy; industry, innovation and infrastructure; and climate action.
Both the bond and the Science Hub align with the values of the school’s community, Cossette said.
“For Concordia, the question of sustainability is also a high priority for us so it’s a good message to present to our stakeholders, our students and our community,” he said.
The university decided early on that it would go the route of a sustainable bond and the decision was met with significant interest from investors. It was in meetings with investors that Concordia was pushed to extend the bond from its planned 10-year duration to 20 years.
Interest in the bond was high, Cossette said, because investors were looking to use it to meet their own objectives to become more sustainable and eco-friendly.
“There was a lot of appetite,” he said. “It was very easy to sell.”
The university only made the bonds available to institutional investors such as insurance companies, banks and pension funds, said Cossette, who added that that’s the norm. The only way retail investors would be able to acquire these bonds is if institutional investors sell them off. Cossette doesn’t see this happening, suggesting they’re meant more for a “buy and hold” strategy.
The higher yield may sway investors to do just that. While Cossette said the yield would have remained the same even if it was a regular bond, it clearly outpaces the 2.1 per cent being offered on the Canada 20-year Government Bond. The U.S. 20-year Bond is yielding 2.9 per cent.
Concordia expects to open its Science Hub in the fall of 2019.