Green bonds priced

It was global, it was registered with the Securities & Exchange Commission, but was sold through the borrower’s domestic medium term note syndicate. Clearly the province of Ontario was determined to make a splash with its first green bond that was priced Thursday.

The talk is that there were about $2.5-billion in orders from 80 investors for the $500-million of four-year securities. Accordingly, there were lots of cutbacks to the buyers who had expressed an interest in the bonds that rank equally with other obligations issued by Ontario.

But the bonds are different in one key area: the proceeds are earmarked to fund projects with specific environmental benefits. The province has identified five areas — clean transportation, energy efficiency and conservation; clean energy and technology; forestry, agriculture and land management; and climate adaption and resilience — as eligible projects.

Bank of America Merrill Lynch, CIBC World Markets, HSBC Securities and RBC Capital Markets were joint lead managers on the offering that closes next week. For the buyers, the bonds were priced at $99.823 per $100 par value to generate a yield of 1.796%. The coupon was 1.75%.

Creighton steps down

A decade and a half after he and Carl Otto formed a money manager that was the first of its kind in Canada, David Creighton has quietly stepped away from day-to-day responsibilities at Montreal-based Cordiant Capital Inc.

“We’ve gone from a start-up to the viable business and I strongly believe that the opportunity in the space, that we at Cordiant have carved out, is still in its early days,” said Mr. Creighton Thursday. Bertrand Millot, who joined the company in 2002, is replacing Mr. Creighton as chief executive.

Mr. Creighton, formerly based in London with BMO Nesbitt Burns, formed Cordiant to provide Canadian institutional investors with exposure to loans made to companies based in emerging-market countries, but backed by solid international financial institutions.

But he needed investors and two years after setting up Cordiant, the manager closed its first fund with US$360-million in the kitty contributed by the Caisse de dépôt et placement du Québec and Ontario Teachers. That capital was used to invest in Class B loans issued by the International Finance Corp., a unit of the World Bank.

With that initial capital Creighton was on his way.

In short order, two additional funds, one for US$370-million and the other for US$460-million, were formed with a wider group of investors on board. Later a EURO 500-million fund was raised. Cordiant is now onto its fourth fund, which is a few weeks away from its final close: in its first close US$250million was raised.

Given that some of the capital has been returned to its investors, Cordiant now manages more than US$1-billion, the bulk of which comes from investors outside of Canada. In its 15 years, Cordiant’s debt funds have invested in 55 countries. (Currently it has investments in about 30 countries.)

Cordiant invests on a spread (above LIBOR) basis. During the financial crisis the spreads rose and are now 150 -200-basis points above historical levels. The average spread is in the 5%-6% range.

Cordiant has also branched into private equity: in 2007 it was made the comanager on a US$212 private equity fund. That is now in sell-down mode.