Ontario to issue green bonds in 2nd issue

The stage is set for a second green- bond issue by the province of Ontario. The province, which raised $ 500 million of four- year debt at 1.75 per cent in October 2014, has announced the lead managers for an upcoming offering. Given that marketing has started, the deal could be priced as early as this week.

The province has appointed Bank of America Merrill Lynch, BMO Capital Markets, HSBC Canada, RBC Capital Markets and TD Securities for its offering. On its previous deal, BofAML, CIBC, HSBC and RBC Capital Markets played the key roles. Ontario has welcomed two domestic firms and said farewell to one.

The talk is that Ontario is after at least $ 500 million, though there is room for the deal to grow, according to the Street. It’s understood the province is seeking seven- year money that will be priced in the context of its domestic funding costs.

Certainly the issuer has given itself the ability to raise a healthy- sized issue. As with its first offering, the province’s upcoming green-bond issue is being registered as a global bond with the Securities and Exchange Commission. Ontario also takes the extra step of developing its green bond in consultation with the Center for International Climate and Environmental Research Oslo (or CICERO.)

Launching a second green- bond issue is consistent with what Ontario said when its breakthrough deal came to market. Back then, the borrower said it will “make the first green bonds available through its current dealer group to Canadian and international institu- tional investors to help establish a Canadian- dollar green- bond market and attract new investors.”

Last year, the local market received a boost when Telus Corp. raised $ 225 million in green bonds in a deal that’s understood to be the first time a green bond has been used to support a real estate financing. ( It’s worth noting that a green bond was used to assist with the construction of the North Island Hospitals Project, a t wo- hospital complex on Vancouver Island that was done through a publicprivate partnership.) The capital raised was used to retire construction financing taken on to build Telus Garden in Vancouver. The 10- year bonds were placed privately at a coupon of 3.4 per cent.

In 2015, the European Investment Bank, a so- called supranational sovereign agency (SSA) and the world’s largest issuer of green bonds, raised $ 500 million in the domestic market via an fiveyear offering at 1.25 per cent. That financing marked the first time a climate- awareness bond has been issued domestically by a non- Canadian issuer.

WAITING ON B. C.’ S ONSHORE YUAN ISSUE

A little more than 3,000 kilometres to the west of Ontario, the province of British Columbia is also getting ready to make a little history: It will become the first sovereign issuer in the onshore interbank Chinese market.

Two i nternational development banks have already raised capital in that market. The AAA- r ated province has named Bank of China and HSBC for its inaugural issue of Panda bonds, with a deal expected by month’s end.

The province made that decision about a month after the People’s Bank of China announced i t had completed the registration process allowing the sale of six billion in yuan- denominated bonds ($ 1.3 billion).

That registration — that also involved approval from the National Association of Financial Market Institutional Investors — occurred after B.C. had already raised about $ 1 billion in the offshore yuan market.