Massachusetts: Green Bond Auction Hot, Other Bonds Tepid

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by Sean Kidney

The Massachusetts AA+ green bond I mentioned last week got a lot of coverage on release this week – even the WSJ ran the story. But there was a twist: it seems the State had to scale back the total $1.1bn GO [general obligation] offering to $670m on tepid demand, but the green bond bit was 30% oversubscribed.

For all you prospective issuers out there: the green bonds also lured as many as 9 new institutional investors for Massachusetts bonds. One buyer went so far as to say “We think more municipalities should do the same.” So perhaps this is Massachusetts starting a trend yet again?

Mind you, for those of us concerned about climate, Massachusetts is applying a broad interpretation of “green”, as Assistant Treasurer Steve Grossman said to BloombergTV. The bond has more of a Parks & Recreation focus than the IFC / World Bank flavors that inspired them, with only a subset of allocations looking like they would qualify under the Climate Bond Standard.

Cut to Climate Bond Standard board member, California State Treasurer Bill Lockyer:

Climate Bond Standards offer a valuable tool to help investor to assess the integrity of environmental claims for green bonds.”

One important point: Massachusetts say they will be putting effort into transparency for investors via website reporting – good on them.

Sean Kidney is Chair of the Climate Bonds Initiative, an “investor-focused” not-for-profit promoting long-term debt models to fund a rapid, global transition to a low-carbon economy. 

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